Software piracy: an analysis of protection strategies
Management Science
Information rules: a strategic guide to the network economy
Information rules: a strategic guide to the network economy
Information Goods Pricing and Copyright Enforcement: Welfare Analysis
Information Systems Research
Convex Optimization
Managing Digital Piracy: Pricing and Protection
Information Systems Research
Network Software Security and User Incentives
Management Science
Information Systems Research
Information Goods and Vertical Differentiation
Journal of Management Information Systems
Impact of piracy on innovation at software firms and implications for piracy policy
Decision Support Systems
Research Note---When Is Versioning Optimal for Information Goods?
Management Science
Versioning and Piracy Control for Digital Information Goods
Operations Research
Let the Pirates Patch? An Economic Analysis of Software Security Patch Restrictions
Information Systems Research
Digital Piracy: A Competitive Analysis
Marketing Science
Information Goods vs. Industrial Goods: Cost Structure and Competition
Management Science
Revisiting the incentive to tolerate illegal distribution of software products
Decision Support Systems
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It is commonly believed that piracy of information goods leads to lower profits, which translate to lower incentives to invest in innovation and eventually to lower-quality products. Manufacturers, policy makers, and researchers all claim that inadequate piracy enforcement efforts translate to lower investments in product development. However, we find many practical examples that contradict this claim. Therefore, to examine this claim more carefully, we develop a rigorous economic model of the manufacturer's quality decision problem in the presence of piracy. We consider a monopolist who does not have any marginal costs but has a product development cost quadratic in the quality level produced. The monopolist faces a consumer market heterogeneous in its preference for quality and offers a quality level that maximizes its profit. We also allow for the possibility that the manufacturer may use versioning to counter piracy. We unexpectedly find that in certain situations, lower piracy enforcement increases the monopolist's incentive to invest in quality. We explain the reasons and welfare implications of our findings. This paper was accepted by Lorin Hitt, information systems.