Maffioletti and Ramello (2004)
|Maffioletti and Ramello (2004)|
|Title:||Should We Put Them in Jail? Copyright Infringement, Penalties and Consumer Behaviour: Insights from Experimental Data|
|Author(s):||Maffioletti, A., Ramello, G. B.|
|Citation:||Maffioletti, A. Ramello, G. B. 2004. Should We Put Them in Jail? Copyright Infringement, Penalties and Consumer Behaviour: Insights from Experimental Data. Review of Economic Research on Copyright Issues, 1, 81-95.|
|Key Related Studies:|
|Linked by:||Liebowitz and Watt (2006)|
|About the Data|
|Data Description:||In total, 74 students participated to the first experiment, and 54 in the second experiment. In the Third experiment where the real willingness to pay was assessed the authors ran 4 auctions with 15 participants each. 188 observations in total and They were all students from a northern Italian university with similar background.|
|Data Type:||Primary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
The purpose of this paper is to deepen the knowledge of consumer behaviour in information goods markets, taking as a reference the sound recording market. In particular, its aim is twofold: on the one hand it attempts to get new insights on consumers paying special attention to their willingness to pay and to purchasing behaviour; on the other hand it wants to find out whether the recently adopted increase in legal measures against consumers by industries can have positive effects on lowering copyright infringement and raising legal demand. Using experimental methods, we elicited individual preferences in legal and burned CDs. We used hypothetical as well as real choices. Our experimental results suggest that lawsuits can effectively lower the rate of copying because they raise the probability of being caught by consumers and thus punished. However, they do not necessarily raise legal sales since the measured consumer willingness to pay is generally lower than the market price for legal products. Consequently, increased copyright enforcement may only lead to demand withholding.
Main Results of the Study
The aim of the Experiments was to answer the 3 questions below:
- Whether a potential demand for legal CDs exists which could be satisfied at the current market price or at a lower price than the actual market price.
- Whether a positive price exists that is significantly different from zero for burned CDs.
- Whether the judicial strategy of suing consumers can have positive effects on lowering copyright infringement and/or on raising the demand for legal products.
To answer these questions the authors ran three experiments, two measuring the hypothetical willingness to pay and one measuring the real willingness to pay through an auction market.
Experimental data suggests that lawsuits can effectively lower the rate of copying because they raise the probability percieved by consumers of being caught and thus of being punished. However they donot necessarily raise legal sales since the measured consumer willingness to pay is generally lower than the market price for legal products. Consequently, increased copyright enforcement may only lead to demand withholding.
Policy Implications as Stated By Author
- Experimental findings seem to recommend that firms adopt a different and more affordable pricing strategy that could have two effects; allowing positive profits, and crowding-out a part of illegal consumption
- these outcomes, together with the existing economic literature, advocate a more cautious treatment of copyright infringement in the name of social welfare, as given a specific legal demand, infringing activities serve to increase consumer surplus in the static framework and can, under certain conditions, increase the legal demand from a dynamic perspective
Coverage of Study
|Level of aggregation:||University students|
|Period of material under study:||2004|