Online Piracy and the “Longer Arm” of Enforcement

Controlling digital piracy has remained a top priority for manufacturers of information goods, as well as for many governments around the world. Among the many forms taken by digital piracy, we focus on an increasingly common one—namely, online piracy—that is facilitated by torrent sites and cyberlockers who bring together consumers of pirated content and its suppliers. Motivated by recent empirical literature that makes a clear distinction between antipiracy efforts that restrict supply of pirated goods (supply-side enforcement) and ones that penalize illegal consumption (demand-side enforcement), we develop a simple economic model and discover some fundamental differences between these two types in terms of their impacts on innovation and welfare. All in all, supply-side enforcement turns out to be the “longer arm”—it has a more desirable economic impact in the long run. Our results have clear implications for manufacturers, consumers, and policy makers.


Publication Date:
May 07 2018
Date Submitted:
Jul 10 2019
ISSN:
0025-1909
Citation:
Management Science
Articles in Advance




 Record created 2019-07-10, last modified 2019-07-12

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