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Why do Software Manufacturers Tolerate Piracy in Transition and Less Developed Countries? A theoretical model

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  • Michael Kunin

Abstract

This paper provides an explanation as to why software manufacturers from developed countries tolerate widespread copyright infringement in less developed countries and often even offer local versions of their products. In a simple two-period framework, I show that if network externalities are present and an improvement in copyright enforcement is expected, then it is profitable for the software manufacturer to enter the market even if it incurs losses in the beginning when copyright enforcement is weak.

Suggested Citation

  • Michael Kunin, 2004. "Why do Software Manufacturers Tolerate Piracy in Transition and Less Developed Countries? A theoretical model," CERGE-EI Working Papers wp231, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp231
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    References listed on IDEAS

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    1. repec:bla:econom:v:59:y:1992:i:233:p:35-51 is not listed on IDEAS
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    Cited by:

    1. Jiri Strelicky & Kresimir Zigic, 2011. "Intellectual Property Rights Protection and Enforcement in a Software Duopoly," CERGE-EI Working Papers wp435, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

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    More about this item

    Keywords

    Intellectual property rights; Software; Piracy; Transition; Network externalities.;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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