Difference between revisions of "Takeyama (1994)"
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* Network effects and indirect appropriation are not competing hypotheses and that both effects should be considered in any empirical application | * Network effects and indirect appropriation are not competing hypotheses and that both effects should be considered in any empirical application | ||
|Description of Data=The author proposes an economic model that shows that, once the network-enhancing effect of the copies is taken into account, not only can copying lead to greater firm profits, it can produce a Pareto improvement in social welfare, despite the absence of indirect appropriation | |Description of Data=The author proposes an economic model that shows that, once the network-enhancing effect of the copies is taken into account, not only can copying lead to greater firm profits, it can produce a Pareto improvement in social welfare, despite the absence of indirect appropriation | ||
| − | |Data Year= | + | |Data Year=Not stated |
|Data Type=Primary and Secondary data | |Data Type=Primary and Secondary data | ||
|Data Source=Literature review; | |Data Source=Literature review; | ||
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|Sample Size=1 | |Sample Size=1 | ||
|Level of Aggregation=Economic model, | |Level of Aggregation=Economic model, | ||
| − | |Data Material Year= | + | |Data Material Year=Not stated |
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Revision as of 07:01, 8 October 2016
Contents
Source Details
| Takeyama (1994) | |
| Title: | The welfare implications of unauthorized reproduction of intellectual property in the presence of demand network externalities |
| Author(s): | Takeyama, LN |
| Year: | 1994 |
| Citation: | Takeyama, L. N. (1994). The welfare implications of unauthorized reproduction of intellectual property in the presence of demand network externalities. The journal of industrial economics, 155-166. |
| Link(s): | Definitive |
| Key Related Studies: | |
| Discipline: | |
| Linked by: | Arai and Kinukawa (2014), Banerjee, Banerjee and Raychaudhuri (2008), Hui and Png (2003), Oestreicher-Singer and Sundararajan (2010), Peitz and Waelbroeck (2006a), Peitz and Waelbroeck (2006b), Smith and Telang (2012), Tanaka (2004), Yoon (2002), Zamoon and Curley (2008) |
| About the Data | |
| Data Description: | The author proposes an economic model that shows that, once the network-enhancing effect of the copies is taken into account, not only can copying lead to greater firm profits, it can produce a Pareto improvement in social welfare, despite the absence of indirect appropriation |
| Data Type: | Primary and Secondary data |
| Secondary Data Sources: | |
| Data Collection Methods: | |
| Data Analysis Methods: | |
| Industry(ies): | |
| Country(ies): | |
| Cross Country Study?: | No |
| Comparative Study?: | No |
| Literature review?: | Yes |
| Government or policy study?: | No |
| Time Period(s) of Collection: |
|
| Funder(s): | |
Abstract
This paper finds that unauthorized reproduction of intellectual property in the presence of demand network externalities can not only induce greater firm profits relative to the case where there is no copying, it can lead to a Pareto improvement in social welfare. Ceteris paribus, when network externalities are present, firms have a greater incentive to expand output because marginal revenue is higher and/or they may wish to create preemptive installed bases. This paper suggests that unauthorized copying can be a relatively efficient means of achieving this by allowing the firm, in effect, to 'price discriminate' among different classes of consumers.
Main Results of the Study
- There is a general consensus that firm profits necessarily decline with copying whenever the firm is unable indirectly to appropriate downstream revenue from reproductions. This paper demonstrates that, even without indirect appropriation, when demand network externalities are considered, not only can copying lead to greater firm profits, it can produce a Pareto improvement in social welfare
- Unauthorized copying can be a relatively efficient means of increasing network size
- Unauthorized copying allow the firm to price discriminate among different classes of consumers. That is, some units (the copies) are "sold" at one price (zero) while other units are sold at a higher price. Ceteris paribus, when network externalities are present, the firm has a greater incentive to expand output because marginal revenue is higher, and in some cases the firm may wish to create a preemptive installed base
- Inframarginal consumers purchase originals at a price that may largely appropriate the externality of increased network size created by copier
- Without copying, the same network size may only be obtained at a possibly lower price (and certainly positive marginal cost) on all existing units.
- Profits may be greater with copying even if all deterred pirates subsequently purchase
- The presence of copying with network effects can also be a relatively efficient means of achieving long-run strategic outcomes
Policy Implications as Stated By Author
- Standard measures of the harm to producers and society from unauthorized reproduction of intellectual property may be overstated
- Network effects and indirect appropriation are not competing hypotheses and that both effects should be considered in any empirical application
Coverage of Study
Datasets
| Sample size: | 1 |
| Level of aggregation: | Economic model |
| Period of material under study: | Not stated |
