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In the following, we examine a market of a digital consumption good withmonopolistic supply. In this market, it is the ability of the consumer to bypass-crack- the copy-protection of the monopolist which induces a lower price ofthe digital good, compared to an uncontested monopoly textbook case. Weanalyze the complex relationship between the cracking efforts of the consumer,the copy-protection efforts and the pricing decision of the monopolist, and thewelfare of the economy. We find, for example, that the monopolist will deterpiracy if the exogenous relative effectiveness of the consumer’s bypassingactivity is low compared to the copy-protection technology. In this case welfareis lower than the welfare in the textbook case. On the contrary, welfarerises above the textbook case level if the relative effectiveness of cracking issufficiently high.

Item Type: MPRA Paper -

Institution: Johannes-Gutenberg University, Mainz-

Original Title: Piracy of Digital Products: A Contest Theoretical Approach-

Language: English-

Keywords: Digital Products; Contests; Security of Property Rights; Endogenous Monopoly Price-

Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - MonopolyC - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative GamesD - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights-

Autor: Hoffmann, Magnus

Fuente: https://mpra.ub.uni-muenchen.de/5944/

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