We analyse how the presence of a (private, small-scale) file-sharing community affects the profitability of producers of digital goods within a spatial duopoly model à la Hotelling (1929). Consumers can download pirated content by joining this file-sharing network. To gain access to the community, consumers have to buy and share a digital good with other members. We show that firms benefit from piracy in emerging markets, that is, markets that are not fully covered. The activity of file-sharing, in fact, allows firms to reach a larger share of customers who otherwise would not buy at all. This effect is missing in mature and widespread markets where firms prefer to be protected from piracy. Our results provide a rationale for the observation that in emerging countries, companies are unlikely to take a firm stance against piracy.

Turning Piracy into Profits: a Theoretical Investigation

C. Vergari
2010-01-01

Abstract

We analyse how the presence of a (private, small-scale) file-sharing community affects the profitability of producers of digital goods within a spatial duopoly model à la Hotelling (1929). Consumers can download pirated content by joining this file-sharing network. To gain access to the community, consumers have to buy and share a digital good with other members. We show that firms benefit from piracy in emerging markets, that is, markets that are not fully covered. The activity of file-sharing, in fact, allows firms to reach a larger share of customers who otherwise would not buy at all. This effect is missing in mature and widespread markets where firms prefer to be protected from piracy. Our results provide a rationale for the observation that in emerging countries, companies are unlikely to take a firm stance against piracy.
2010
Minniti, A.; Vergari, C.
File in questo prodotto:
File Dimensione Formato  
sdarticle.pdf

non disponibili

Tipologia: Versione finale editoriale
Licenza: NON PUBBLICO - accesso privato/ristretto
Dimensione 659.15 kB
Formato Adobe PDF
659.15 kB Adobe PDF   Visualizza/Apri   Richiedi una copia
FileSharing_8Aprile.pdf

accesso aperto

Tipologia: Documento in Post-print
Licenza: Creative commons
Dimensione 322.97 kB
Formato Adobe PDF
322.97 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11568/963197
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 18
  • ???jsp.display-item.citation.isi??? 16
social impact