Digital Piracy: Theory

Paul Belleflamme and Martin Peitz

in The Oxford Handbook of the Digital Economy

Published in print August 2012 | ISBN: 9780195397840
Published online November 2012 | | DOI:

Series: Oxford Handbooks

Digital Piracy: Theory

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  • Economics
  • Economic Development and Growth



This article reviews the theoretical literature on digital piracy. It explains the reasons for intellectual property protection, a few facts about copyright protection, and the reasons to become a digital pirate. The recent changes in copyright law have been actuated by the emergence of digital technologies and the Internet. The influences of end-user piracy on firms' profits and strategies are investigated. Piracy could enhance welfare in the short and long run due to sampling, network effects, and indirect appropriation. The interactions between copyright holders under the threat of piracy yield surprising welfare implications. Although commercial piracy is a major concern to the producers of digital products, mainly in developing countries, it has received little attention in the economics literature. Competition may significantly change copyright holders' strategies towards piracy compared to what can be drawn from the basic monopoly approach.

Keywords: digital piracy; intellectual property protection; digital pirate; copyright law; end-user piracy; commercial piracy; competition; copyright holders

Article.  20746 words. 

Subjects: Economics ; Economic Development and Growth

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