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Software Piracy in the Video Game Market

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  • Gürtler, Oliver

Abstract

In this paper, the market for video games is considered, where some firms produce both, hardware and software. It is analyzed, whether these firms are interested in strategically enabling software piracy. It will be shown that this is indeed the case, if firms di¤er substantially in hardware production costs. Then, the low-cost producer gains from enabling software piracy in two ways. First, it increases its market share in the hardware and, accordingly, in the software market. Second, it can raise its hardware price. These two benefits overcompensate the loss resulting from a higher fraction of pirating consumers in the software market.

Suggested Citation

  • Gürtler, Oliver, 2006. "Software Piracy in the Video Game Market," Bonn Econ Discussion Papers 20/2006, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:202006
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Video Games Market; Software Piracy; Fundamental Transformation;
    All these keywords.

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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