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DOES COPYRIGHT ENFORCEMENT ENCOURAGE PIRACY? *
Author(s) -
HARBAUGH RICK,
KHEMKA RAHUL
Publication year - 2010
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2010.00419.x
Subject(s) - monopoly , enforcement , business , intellectual property , incentive , value (mathematics) , government (linguistics) , market power , economic surplus , commerce , industrial organization , advertising , economics , microeconomics , market economy , law , political science , computer science , linguistics , philosophy , machine learning , welfare
When copyright enforcement is targeted at high‐value buyers such as corporate and government users, the copyright holder charges super‐monopoly prices, thereby encouraging low‐value buyers to switch to inferior pirated copies. We show that enlarging the copyright holder's captive market through more extensive copyright enforcement reduces prices toward the monopoly level, increases sales of legitimate copies and can increase consumer surplus. Therefore, in contrast with the case of more intensive copyright enforcement, more extensive copyright enforcement over some range can increase the incentive to generate intellectual property while also reducing the loss to consumers from monopoly power.