[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/mos/moswps/2009-26.html
   My bibliography  Save this paper

On the Impact of Piracy on Innovation in the Presence of Technological and Market Uncertainty

Author

Listed:
  • Dyuti Banerjee
  • Ishita Chatterjee
Abstract
This paper analyses the effect of piracy on innovation in the presence of R&D competition with technological and market uncertainty. With a single innovating firm facing technological uncertainty, piracy unambiguously retards innovation. However, with R&D competition where firms face market and technological uncertainties, we show that piracy may enhance overall innovation. We also show that if the difference between the probabilities of success of the innovating firms is relatively large then piracy enhances the R&D investment and profit of the less efficient firm.

Suggested Citation

  • Dyuti Banerjee & Ishita Chatterjee, 2009. "On the Impact of Piracy on Innovation in the Presence of Technological and Market Uncertainty," Monash Economics Working Papers 26-09, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2009-26
    as

    Download full text from publisher

    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2009/2609impactpiracybanerjjechatterjee.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard J. Rosen, 1991. "Research and Development with Asymmetric Firm Sizes," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 411-429, Autumn.
    2. Robert M. Hunt, 2006. "When Do More Patents Reduce R&D?," American Economic Review, American Economic Association, vol. 96(2), pages 87-91, May.
    3. Sana El Harbi & Gilles Grolleau, 2008. "Profiting from Being Pirated by ‘Pirating’ the Pirates," Kyklos, Wiley Blackwell, vol. 61(3), pages 385-390, August.
    4. Banerjee, Dyuti S., 2003. "Software piracy: a strategic analysis and policy instruments," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 97-127, January.
    5. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 157-189, March.
    6. Scotchmer, suzanne, 1998. "The Independent-Invention Defense in Intellectual Property," Berkeley Olin Program in Law & Economics, Working Paper Series qt2s5174q8, Berkeley Olin Program in Law & Economics.
    7. Carl Shapiro, 2006. "Prior User Rights," American Economic Review, American Economic Association, vol. 96(2), pages 92-96, May.
    8. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
    9. Duchene, Anne & Waelbroeck, Patrick, 2006. "The legal and technological battle in the music industry: Information-push versus information-pull technologies," International Review of Law and Economics, Elsevier, vol. 26(4), pages 565-580, December.
    10. Robert M. Hunt, 2004. "Patentability, Industry Structure, and Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 401-425, September.
    11. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 155-166, June.
    12. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
    13. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-246, April.
    14. Poyago-Theotoky, Joanna, 1996. "R&D Competition with Asymmetric Firms," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(3), pages 334-342, August.
    15. Jonathan M. Barnett & Gilles Grolleau & Sana El Harbi, 2010. "The Fashion Lottery: Cooperative Innovation in Stochastic Markets," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 159-200, January.
    16. Qiu, Larry D., 2006. "A general equilibrium analysis of software development: Implications of copyright protection and contract enforcement," European Economic Review, Elsevier, vol. 50(7), pages 1661-1682, October.
    17. Yeh-ning Chen & Ivan Png, 2003. "Information Goods Pricing and Copyright Enforcement: Welfare Analysis," Information Systems Research, INFORMS, vol. 14(1), pages 107-123, March.
    18. Cherng G. Ding & Na‐Ting Liu, 2009. "Productivity Changes Of Asian Economies By Taking Into Account Software Piracy," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 135-145, January.
    19. Klaus Kultti & Tuomas Takalo & Juuso Toikka, 2006. "Simultaneous Model of Innovation, Secrecy, and Patent Policy," American Economic Review, American Economic Association, vol. 96(2), pages 82-86, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rodrigo Nobre Fernandez & Felipe Garcia Ribeiro & Jean Del Ponte Duarte, 2018. "Effects of Software Piracy on Economic Growth," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(6), pages 1-11, June.
    2. William M. Volckmann, 2023. "The effects of market size, wealth, and network effects on digital piracy and profit," European Journal of Law and Economics, Springer, vol. 55(1), pages 61-85, February.
    3. Birg, Laura & Voßwinkel, Jan S., 2015. "Minimum quality standards and non-compliance," University of Göttingen Working Papers in Economics 228, University of Goettingen, Department of Economics.
    4. Ming-Fang Tsai & Jiunn-Rong Chiou, 2012. "Counterfeiting, enforcement and social welfare," Journal of Economics, Springer, vol. 107(1), pages 1-21, September.
    5. Salahodjaev, Raufhon & Odilova, Shoirahon & Andrés, Antonio R., 2016. "Intelligence and Crime: A novel evidence for software piracy," MPRA Paper 71569, University Library of Munich, Germany.
    6. Banerjee, Dyuti, 2013. "Effect of piracy on innovation in the presence of network externalities," Economic Modelling, Elsevier, vol. 33(C), pages 526-532.
    7. Caner Demir & Aykut Lenger, 2019. "Intellectual property rights and global imitation chains: the north–south–east model," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 549-569, July.
    8. Waters, James, 2015. "Welfare implications of piracy with dynamic pricing and heterogeneous consumers," European Journal of Operational Research, Elsevier, vol. 240(3), pages 904-911.
    9. Tsai, Ming-Fang & Chiou, Jiunn-Rong & Lin, Chun-Hung A., 2012. "A model of counterfeiting: A duopoly approach," Japan and the World Economy, Elsevier, vol. 24(4), pages 283-291.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Banerjee, Dyuti, 2013. "Effect of piracy on innovation in the presence of network externalities," Economic Modelling, Elsevier, vol. 33(C), pages 526-532.
    2. Chang, Yang-Ming & Walter, Jason, 2015. "Digital piracy: Price-quality competition between legal firms and P2P network hosts," Information Economics and Policy, Elsevier, vol. 31(C), pages 22-32.
    3. Ünlü, Vural & Hess, Thomas, 2003. "The optimal level of technical copyright protection: A game-theoretic approach," Working Papers 9/2003, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    4. Xinyu Hua & Kathryn E. Spier, 2023. "Settling Lawsuits With Pirates," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(2), pages 543-575, May.
    5. Nie, Jiajia & Zhong, Ling & Li, Gendao & Cao, Kuo, 2022. "Piracy as an entry deterrence strategy in software market," European Journal of Operational Research, Elsevier, vol. 298(2), pages 560-572.
    6. Dyuti S. Banerjee & Teyu Chou, 2007. "Copyright Protection And Innovation In The Presence Of Commercial Piracy," Monash Economics Working Papers 05-07, Monash University, Department of Economics.
    7. Dyuti Banerjee, 2011. "On the sufficiency of regulatory enforcement in combating piracy," Journal of Regulatory Economics, Springer, vol. 40(2), pages 160-176, October.
    8. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
    9. Tsai, Ming-Fang & Chiou, Jiunn-Rong & Lin, Chun-Hung A., 2012. "A model of counterfeiting: A duopoly approach," Japan and the World Economy, Elsevier, vol. 24(4), pages 283-291.
    10. Jens Hougaard & Mich Tvede, 2010. "Selling digital music: business models for public goods," Netnomics, Springer, vol. 11(1), pages 85-102, April.
    11. Cho, Won-Young & Ahn, Byong-Hun, 2010. "Versioning of information goods under the threat of piracy," Information Economics and Policy, Elsevier, vol. 22(4), pages 332-340, December.
    12. Yeh-ning Chen & Ivan Png, 2003. "Information Goods Pricing and Copyright Enforcement: Welfare Analysis," Information Systems Research, INFORMS, vol. 14(1), pages 107-123, March.
    13. Martyna Kobus & Michał Krawczyk, 2013. "Piracy as an ethical decision," Working Papers 2013-22, Faculty of Economic Sciences, University of Warsaw.
    14. Dyuti S. Banerjee, 2014. "Effectiveness of government anti-piracy enforcement policy: commitment versus non-commitment," Chapters, in: Richard Watt (ed.), Handbook on the Economics of Copyright, chapter 15, pages 264-284, Edward Elgar Publishing.
    15. Yuanzhu Lu & Sougata Poddar, 2019. "Limiting End-user Piracy - The Role of Private and Public Anti-Piracy Measure," Annals of Economics and Finance, Society for AEF, vol. 20(1), pages 181-197, May.
    16. Žigić, Krešimir & Střelický, Jiří & Kúnin, Michael, 2023. "Copyright and firms’ own IPR protection in a software market: Monopoly versus duopoly," Economic Modelling, Elsevier, vol. 123(C).
    17. Shin-yi Wu & Pei-yu Chen, 2008. "Versioning and Piracy Control for Digital Information Goods," Operations Research, INFORMS, vol. 56(1), pages 157-172, February.
    18. Banerjee, Dyuti S., 2006. "Lobbying and commercial software piracy," European Journal of Political Economy, Elsevier, vol. 22(1), pages 139-155, March.
    19. Martin Peitz & Patrick Waelbroeck, 2003. "Piracy of Digital Products: A Critical Review of the Economics Literature," CESifo Working Paper Series 1071, CESifo.
    20. Tunay I. Tunca & Qiong Wu, 2013. "Fighting Fire with Fire: Commercial Piracy and the Role of File Sharing on Copyright Protection Policy for Digital Goods," Information Systems Research, INFORMS, vol. 24(2), pages 436-453, June.

    More about this item

    Keywords

    Innovation; market uncertainty; R&D race; technological uncertainty;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mos:moswps:2009-26. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Simon Angus (email available below). General contact details of provider: https://edirc.repec.org/data/dxmonau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.