Piracy and Quality Choice in Monopolistic Markets

Topics:
Music
Tags:
Business Operations,
Corporate Law,
Differentiation,
Piracy,
University Of Bologna
Source:
University of Bologna

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Overview: This paper studies the impact of piracy on the quality choices of a monopolist. In the absence of piracy, the monopolist has no incentive to differentiate its products. With piracy the monopolist might in- stead produce more than one quality, so that differentiation arises as the optimal strategy. This is because the producer wants to divert consumers from the pirated good to the original one. Differentiation involves either producing a low-quality good such that piracy is eliminated or the monopolist can choose qualities such that piracy is still observed in equilibrium.

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Format: PDF | Size: 341KB | Date: Apr 2002 | Pages: 33

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