Impact of Network Externality on End-User Piracy: Revisited

Abstract

We revisit the issue whether a strong presence of network externality in the digital products market could be a reason for the copyright holders to allow piracy. We find that except under a limited circumstance this is not true in a framework that involves IPR protection and copyright holder\u27s costly effort to prevent piracy. We further show that as the degree of network externality increases, the strategic piracy deterrence level of the copyright holder increases and the actual rate of piracy decreases