IPR Protection in the High-Tech Industries: A Model of Piracy

Abstract

This article investigates the relation between the level of publicness of digital goods - i.e. their degree of non-excludability and non-rivalness - and the pirating behaviour of the consumers. The main focus is put on the difference between the ex-ante level of publicness - determined by the anti-piracy strategies of the firms - and the ex-post level of publicness - which is a consequence of external factors such as the consumers' network structure, the consumers' sharing behaviour, etc. The two models developed in the article detail the required conditions for anti-piracy strategies to be successful and show the influence of the economic environment on these conditions.

Keywords: Digital goods, Piracy, Public goods, Free-riding, Intellectual Property Rights

JEL Classification: D11, C72, L82, L86, O34