Economics
Digital piracy and firms' strategic interactions: The effects of public copy protection and DRM similarity
Document Type
Article
Abstract
The purpose of this paper is to investigate how different types of strategic interaction affect firms' optimal levels of digital rights management (DRM). In our game-theoretical duopoly model, the firms do not directly compete with prices, but they become interdependent while coping with digital piracy. Our analysis shows that (1) stricter public copy protection by the government leads to lower DRM levels and more piracy when the firms regard their DRM levels as "strategic substitutes," but to higher DRM levels and less piracy when the firms perceive their DRM levels as "strategic complements," and (2) a higher degree of similarity between the DRM systems leads to lower DRM levels and more piracy. We also discuss the policy implications of these findings. © 2010 Elsevier B.V.
Publication Title
Information Economics and Policy
Publication Date
12-2010
Volume
22
Issue
4
First Page
354
Last Page
364
ISSN
0167-6245
DOI
10.1016/j.infoecopol.2010.10.001
Keywords
digital goods, digital rights management (DRM), L13, L82, L86, O34, piracy, strategic complements, strategic substitutes
Repository Citation
Choi, Pilsik; Bae, Sang Hoo; and Jun, Jongbyung, "Digital piracy and firms' strategic interactions: The effects of public copy protection and DRM similarity" (2010). Economics. 64.
https://commons.clarku.edu/faculty_economics/64