In “Digital Piracy: Theory” (click here to download), Paul Belleflamme and Martin Peitz review recent theoretical contributions on digital piracy. The article starts by elaborating on the reasons for intellectual property protection, by reporting a few facts about copyright protection, and by examining reasons to become a digital pirate. Next, it provides an exploration of the consequences of digital piracy, using a base model and several extensions (with consumer sampling, network effects, and indirect appropriation). A closer look at market-structure implications of end-user piracy is then taken. After a brief review of commercial piracy, additional legal and private responses to end-user piracy are considered. Finally, a quick look at emerging new business models is taken.
Note that this article is due to be published in The Oxford Handbook of the Digital Economy, edited by Martin Peitz and Joel Waldfogel for Oxford University Press. The book (expected for 2011) will contain a chapter by Joel Waldfogel on the empirics of digital piracy.
