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Peer-to-peer Networks and Complementary Goods: The Impact of Openness and Innovation on Profitable Piracy

Author

Listed:
  • Thomas Le Texier

    (Université de Rennes 1)

  • Maher Gordah

    (Université de Nice - Sophia Antipolis)

Abstract

File-sharing is often depicted as detrimental to traditional commercial activities and tends to dissuade official digital goods’ producers from innovating. Meanwhile, evidence shows that producers are likely to provide complementary hardware goods that are compatible with digital goods available both offline and online. This article investigates to what extent the introduction of peer-to-peer networks has a positive impact on the level of profits reached by producers. Our model shows that the file-sharing activity does not crowd the official digital goods producers and hardware goods producers out of the market. Moreover, we find that there exists suitable quality-based strategies so that both types of producers benefit from the file-sharing activity. The utility that peer-to-peer networks provide to file-sharers has to be considered cautiously for commercial firms to gain positive outcomes from the file-sharing activity.

Suggested Citation

  • Thomas Le Texier & Maher Gordah, 2011. "Peer-to-peer Networks and Complementary Goods: The Impact of Openness and Innovation on Profitable Piracy," Economic Analysis, Institute of Economic Sciences, vol. 44(1-2), pages 15-37.
    • Handle: RePEc:ibg:eajour:v:44:y:2011:i:1-2:p:15-37
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    File URL: http://www.ien.bg.ac.rs/index.php/en/2011/2011-1-2
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    Citations

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    Cited by:

    1. Heinrich, Torsten, 2014. "Standard wars, tied standards, and network externality induced path dependence in the ICT sector," Technological Forecasting and Social Change, Elsevier, vol. 81(C), pages 309-320.

    More about this item

    Keywords

    Peer-to-peer networks; piracy; complementary goods; communities;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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