IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-13-00630.html
   My bibliography  Save this article

Product Quality in the presence of Network Externality and Commercial Piracy

Author

Listed:
  • Tanmoyee Banerjee (Chatterjee)

    (Jadavpur University)

  • Nilanjana Biswas( Mitra)

    (Sushil Kar College)

Abstract

Our paper develops a two-stage sequential game between an incumbent and a pirate to find the optimal quality level of the firm in the presence of network externality. The results show that the incumbent in the presence of piracy chooses minimum quality for its product and undertakes an anti-copying investment that adversely affects the effective quality level of the pirated good. Further, under SPNE the incumbent becomes a price leader and the pirate chooses to be a follower.

Suggested Citation

  • Tanmoyee Banerjee (Chatterjee) & Nilanjana Biswas( Mitra), 2013. "Product Quality in the presence of Network Externality and Commercial Piracy," Economics Bulletin, AccessEcon, vol. 33(4), pages 3006-3013.
    • Handle: RePEc:ebl:ecbull:eb-13-00630
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I4-P280.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Banerjee, Dyuti S., 2003. "Software piracy: a strategic analysis and policy instruments," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 97-127, January.
    2. Arun Sundararajan, 2003. "Managing Digital Piracy: Pricing, Protection and Welfare," Law and Economics 0307001, University Library of Munich, Germany.
    3. Wauthy, Xavier, 1996. "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 345-353, September.
    4. Takeyama, Lisa N, 1994. "The Welfare Implications of Unauthorized Reproduction of Intellectual Property in the Presence of Demand Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 155-166, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ünlü, Vural & Hess, Thomas, 2003. "The optimal level of technical copyright protection: A game-theoretic approach," Working Papers 9/2003, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    2. Yuanzhu Lu & Sougata Poddar, 2015. "Strategic Choice of Network Externality," Working Papers 2015-03, Auckland University of Technology, Department of Economics.
    3. T. S. Raghu & Rajiv Sinha & Ajay Vinze & Orneita Burton, 2009. "Willingness to Pay in an Open Source Software Environment," Information Systems Research, INFORMS, vol. 20(2), pages 218-236, June.
    4. Peitz, Martin & Waelbroeck, Patrick, 2006. "Piracy of digital products: A critical review of the theoretical literature," Information Economics and Policy, Elsevier, vol. 18(4), pages 449-476, November.
    5. Yuanzhu Lu & Sougata Poddar, 2018. "Strategic Choice of Network Externality and Its Impact on Digital Piracy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(1), pages 139-160, February.
    6. Banerjee, Dyuti & Chatterjee, Ishita, 2010. "The impact of piracy on innovation in the presence of technological and market uncertainty," Information Economics and Policy, Elsevier, vol. 22(4), pages 391-397, December.
    7. Banerjee, Dyuti, 2013. "Effect of piracy on innovation in the presence of network externalities," Economic Modelling, Elsevier, vol. 33(C), pages 526-532.
    8. Gil Ricard, 2006. "The Economics of IPR Protection Policies," Review of Network Economics, De Gruyter, vol. 5(3), pages 1-21, September.
    9. Jen-Te Yao, 2005. "Counterfeiting and an Optimal Monitoring Policy," European Journal of Law and Economics, Springer, vol. 19(1), pages 95-114, January.
    10. Kahina Cherfi-Feroukhi & Said Souam, 2019. "Formal and Informal Interactions in a Duopoly Model," Economics Bulletin, AccessEcon, vol. 39(2), pages 1095-1102.
    11. Minniti, Antonio & Vergari, Cecilia, 2010. "Turning Piracy into Profits: a Theoretical Investigation," Information Economics and Policy, Elsevier, vol. 22(4), pages 379-390, December.
    12. Kresimir Zigic & Jiri Strelicky & Michael Kunin, 2013. "The Interaction between Private and Public IPR Protection in a Software Market: A Positive and Normative Analysis," CERGE-EI Working Papers wp490, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    13. Sanjay Jain, 2008. "Digital Piracy: A Competitive Analysis," Marketing Science, INFORMS, vol. 27(4), pages 610-626, 07-08.
    14. Sougata Poddar, 2002. "Network Externality and Software Piracy," WIDER Working Paper Series DP2002-115, World Institute for Development Economic Research (UNU-WIDER).
    15. Jonas Häckner & Astri Muren, 2015. "Counterfeiting and Negative Consumption Externalities – A Closer Look," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 337-350, December.
    16. Yeh-ning Chen & Ivan Png, 2003. "Information Goods Pricing and Copyright Enforcement: Welfare Analysis," Information Systems Research, INFORMS, vol. 14(1), pages 107-123, March.
    17. Arai, Yasuhiro, 2011. "Civil and criminal penalties for copyright infringement," Information Economics and Policy, Elsevier, vol. 23(3), pages 270-280.
    18. Dyuti S. Banerjee, 2014. "Effectiveness of government anti-piracy enforcement policy: commitment versus non-commitment," Chapters, in: Richard Watt (ed.), Handbook on the Economics of Copyright, chapter 15, pages 264-284, Edward Elgar Publishing.
    19. Banerjee, Dyuti S., 2003. "Software piracy: a strategic analysis and policy instruments," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 97-127, January.
    20. Yuanzhu Lu & Sougata Poddar, 2019. "Limiting End-user Piracy - The Role of Private and Public Anti-Piracy Measure," Annals of Economics and Finance, Society for AEF, vol. 20(1), pages 181-197, May.

    More about this item

    Keywords

    piracy; network externality effect; anti copying investment;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-13-00630. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.