Working Paper, 2007 Australasian Meeting of The Econometric Society, University of Queensland, Brisbane, Australia, Econometric Society; 3rd Annual Conference on Economic Growth and Development Programme, New Delhi, India
This paper looks at how levels of copyright protection affect the economy.
Government enforcement of copyright can make consumers bettter off. Strategies that firms adopt to deter piracy can be costly for everyone.
- In sectors protected by copyright, government enforcers, copyright owners like software producers, consumers, and pirates all interact.
- Enforcer’s choices about enforcement affect copyright owner’s choices such as pricing. Both sets of choices affect pirate’s choices.
- Piracy can be deterred by an enforcement strategy that increases product quality, making consumers better off. But it also increases the price, making consumers worse off.
- Piracy always tends to somewhat reduce incentives to innovate, even when government enforcement is strong. Consumers are best off when government enforcement does deter piracy, but it will not always do so.