Does Piracy have a Value?
Wednesday, August 30, 2006 at 2:32PM The operator of a warez site was just sentenced to 6 years in prison.
Microsoft launches a secret shopper plot and files suit against 26 seperate companies.
A recent research paper titled "Piracy Prevention and the Pricing of Information Goods" by Helmuth Cremer and Pierre Pestieau creates a simple model of piracy with the goal of analysing the effects of piracy on prices and welfare. This paper also studies the effects of an enforcement policy. Two seperate environments are contrasted in this paper: "one in which the monopoly is regulated and one in which it maximises profits and is not regulated, except that the public authority may be responsible for the control of piracy."
More from the abstract: "A monopolist produces an information good (involving a `large' development cost and a `small' reproduction cost) that is sold to two groups of consumers differing in their valuation of the good."
The paper goes as far as postulating that piracy may actually have an economic value to the copyright holder. Through the pirates acquisition and use of the good despite their refusal to pay for it, the copyright holder increases their market share and continues to maintain the cost of development through their high value clients.
Reader Comments (1)
very informative. now, if an old pirate friend of yours was coming to town, and had lost your number-how would they go about getting that information?