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How Does Public IPR Protection Affect its Private Counterpart? Copyright and the Firms' Own IPR Protection in a Software Duopoly

Author

Listed:
  • Kresimir Zigic
  • Jiri Strelicky
  • Michael Kunin

Abstract

We study how the strength of public intellectual property rights (IPR) protection against software piracy (copyright protection) affects private IPR protection (that software developers may themselves undertake to protect their IPR). There are two software developers that offer a product variety of differing (exogenously given) quality and compete in prices for heterogeneous users, who make a choice whether to buy a legal version, use an illegal copy (if they can), or not use a product at all. Using an illegal version violates IPR and is thus punishable when disclosed. If a developer considers the level of piracy as high, he can introduce a form of physical protection for his software or digital product. The main aim of our analysis is to study how the level and the change of public IPR protection affect the pricing and IPR protection strategies of software developers. In particular, we are interested in establishing when the two forms of IPR protection (public and private) are complements to each other, when are they substitutes and when a change in public IPR has no impact on private IPR protection.

Suggested Citation

  • Kresimir Zigic & Jiri Strelicky & Michael Kunin, 2014. "How Does Public IPR Protection Affect its Private Counterpart? Copyright and the Firms' Own IPR Protection in a Software Duopoly," CERGE-EI Working Papers wp518, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp518
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    References listed on IDEAS

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    More about this item

    Keywords

    vertically differentiated duopoly; software piracy; Bertrand competition; copyright protection; private and public intellectual property rights protection;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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