nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2016‒02‒17
two papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Beat the gun - protection against zero-profit imitation By Schubert, Stefanie; Jost, Peter-J.
  2. Purchase, Pirate, Publicize: The Effect of File Sharing on Album Sales By Jonathan Lee

  1. By: Schubert, Stefanie; Jost, Peter-J.
    Abstract: The recent development of 3D printing raises the issue of how to protect manufacturing firms from product piracy. In this paper, we are interested in potential regulatory requirements to protect firms from falling victim of product piracy and associated quality choices. We employ a game-theoretic model of duopoly competition. One firm offers a high-quality product facing quality-related costs. An imitator views the product and produces an imitation using a low-cost production method as 3D printing. Our results indicate that copy protection by the high-quality firm yields a higher quality than under patent protection. However, the chosen quality level of the high-quality firm is highest in duopoly without protection. Optimal patent protection crucially depends on the underlying objective function. It is only socially optimal if the regulatory authority maximises GDP.
    JEL: L13 L51 O31
    Date: 2015
  2. By: Jonathan Lee (Queen's University)
    Abstract: This paper quantifies the relationship between private-network file sharing activity and music sales in the BitTorrent era. Using a panel dataset of 2,251 albums' U.S. sales and file sharing downloads on a private network during 2008, I estimate the effect of file sharing on album sales. Exogenous shocks to file sharing capacity address the simultaneity problem. In theory, piracy could crowd out legitimate sales by building file sharing capacity, but could also increase sales through word-of-mouth. I find evidence that additional file sharing decreases physical sales but increases digital sales for top-tier artists, though the effects are modest. I also find that file sharing may help mid-tier artists and substantially harms bottom-tier artists, suggesting that file sharing enables consumers to better discern quality among lesser-known artists.
    Keywords: intellectual property, copyright, file sharing, piracy, digital music
    JEL: L82 L86 O34
    Date: 2016–01

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