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Digital Rights Management and Technological Tying

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Abstract

This paper analyzes DRM-based technological tying, where the content and hardware form a system. A closed DRM system makes the legal content incompatible with a rival’s hardware, whose users must then obtain illegal copies. The main finding is that the tying firm gains market power in a competitive hardware market and invests in product upgrades at a later stage. Welfare implications of the policy that requires an open DRM system are also discussed.

Suggested Citation

  • Jin-Hyuk Kim, 2008. "Digital Rights Management and Technological Tying," Working Papers 08-05, NET Institute, revised Sep 2008.
    • Handle: RePEc:net:wpaper:0805
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    File URL: http://www.netinst.org/Kim_08-05.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    digital rights management; copying; tying;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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