Author(s)
Yuanzhu Lu and Sougata Poddar
Source
CEMA Working Paper #389, 2009
Summary
Investigates the effect of intellectual property rights (IPR) protection on piracy.
Policy Relevance
Potential piracy is a major concern for developers of intellectual property. Governments play a large role in deterring this piracy.
Main Points
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“Commercial piracy” refers to the illegal or unauthorized copying and dissemination of someone else’s intellectual property (books, movies, music, software, trademarks, art, ideas, etc) for profit.
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The stronger IPR protection is, the less piracy there will be.
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In general it is optimal for the creator of intellectual property to completely prevent piracy. Preventing piracy is most effective when IPR protection is strong; but if it is weak, the creator will accommodate piracy, that is tolerate it, to some extent. If the pirate is not completely deterred, the creator or producer will go to more trouble to increase the cost of copying, or counterfeiting, by the pirate when the IPR protection is higher.
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Higher IPR protection leads to less effort by producers to prevent piracy, since it can be prevented more easily.
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A commercial pirate will be more inclined to produce a copy of moderate quality rather than of very low or very high quality.
