Assessing the relationship between the user-based market share and unit sales-based market share for pirated software brands in competitive markets

Givon, Moshe; Mahajan, Vijay; Muller, Eitan

doi:10.1016/s0040-1625(96)00181-3

Cited by 27 publications

(36 citation statements)

References 4 publications

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“…Previous research suggests that piracy can be beneficial for an IPR holder, since pirates accelerate diffusion via word-of-mouth (see Givon et al 1995, andGivon et al 1997). We also found some interesting insights studying the financial loss of the IPR holder due to piracy, that is the difference between the partial derivatives of profits of the IPR holder in a monopolistic scenario (see Π   / in Table 1) and those when pirates are present (see Π   / in Table 2).…”

Section: Comparative Staticsmentioning

confidence: 99%

Licensing radical product innovations to speed up the diffusion

Avagyan

Esteban-Bravo

Vidal-Sanz

2014

European Journal of Operational Research

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Inventors can commercialize innovative products by themselves and simultaneously license the technology to other firms. The licensee may cannibalize sales of the licensor, but this can be compensated by gains from royalties. We show in this paper how licenses can be used strategically to speed up the new product diffusion process in two instances of markets: (i) a market with strong Intellectual Property Rights (IPR), and (ii) a market with weak IPR holder and pirate rivals. The main findings suggest that licensing is a beneficial strategy for a licensor in the context of strong IPR, because licensor benefits from the royalties, the advertising investment and positive word-of-mouth effects by licensees. We compare this result with a weak IPR context, where piracy speeds up the product diffusion but this does not compensate IPR holder for the sales loss effect who is willing to license to get some royalties. However, pirates do not generally find interesting the licensing agreement. We present a comparative statics analysis based on numerical simulation.

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Section: Comparative Staticsmentioning

confidence: 99%

Licensing radical product innovations to speed up the diffusion

Avagyan

Esteban-Bravo

Vidal-Sanz

2014

European Journal of Operational Research

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“…In Givon et al (1995) and Givon et al (1997) it is suggested that pirate acquisitions may accelerate legal diffusion through pirate owners' social contacts with non-users. Prasad and Mahajan (2003) show that legal profits may be increased for the same reason, when piracy rates are subject to control by the legal sellers and sales affect price preferences of remaining non-users in a specific way.…”

Section: Introductionmentioning

confidence: 99%

“…Much pirate diffusion research has been theoretical. The empirical work by Givon et al (1995) and Givon et al (1997) assumes that the marginal propensity to pirate is constant. In Haruvy et al (2004), the ratio of pirate sales to legal sales can fall at a constant exponential rate as the number of users increases.…”

Section: Introductionmentioning

confidence: 99%

“…Givon et al (1995) estimates their model by non-linear least squares while omitting joint error specifications between the legal and pirate data, and so do not report parameter standard errors. Standard errors are also missing from non-linear least squares estimates in Givon et al (1997), simulated annealing estimates in Haruvy et al (2004), and calibrated model solutions in Liu et al (2011). We estimate our model by formulating it in state space form, with pirate acquisitions as an unobserved state variable.…”

Section: Introductionmentioning

confidence: 99%

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Variable Marginal Propensities to Pirate and the Diffusion of Computer Software

Waters

2013

SSRN Journal

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In this paper, we empirically investigate the dynamics of the marginal propensity to pirate for computer software. We introduce a state space formulation that allows us to estimate error structures and parameter significance, in contrast to previous work. For data from 1987-92, we find a rising propensity to pirate as the number of existing pirate copies increases, and higher late piracy incidence than implied by static models. We strengthen prior results on the impact of piracy in the spreadsheet market, finding it to be the only significant internal influence on diffusion. However, when we allow for negative error correlation between legal and pirate acquisitions, we contradict earlier work by finding that, in the word processor market, piracy did not contribute to diffusion and only eroded legal sales.

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“…Piracy generates no direct revenue for legal sellers, and may be considered harmful to their interests. However, a number of papers (Givon et al, 1995(Givon et al, , 1997Prasad and Mahajan, 2003;Haruvy et al, 2004;Liu et al, 2011) have suggested that piracy can benefit legal sellers. A common theme is that piracy can act as a control on diffusion, either to reach a certain diffusion rate or network size.…”

Section: Introductionmentioning

confidence: 99%

Pricing Information Goods with Piracy and Heterogeneous Consumers

Waters

2013

SSRN Journal

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We present an information good pricing model with persistently heterogeneous consumers and a rising marginal propensity for them to pirate. Three offsetting pricing mechanisms occur: skimming, compressing price changes, and delaying product launch. We identify a novel trade off in piracy's effect on welfare. We find that piracy quickens sales times and raises welfare in fixed capacity markets, and does the opposite in growing markets. In our model, consumers benefit from piracy except at very high rates in rapidly expanding markets, legal sellers always dislike it, and pirate providers like high but not very high rates. Purchase delay, transient heterogeneity, inelastic demand, and network externalities reduce piracy's effect, but demand uncertainty doesn't.

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Assessing the relationship between the user-based market share and unit sales-based market share for pirated software brands in competitive markets

Cited by 27 publications

References 4 publications

Licensing radical product innovations to speed up the diffusion

Licensing radical product innovations to speed up the diffusion

Variable Marginal Propensities to Pirate and the Diffusion of Computer Software

Pricing Information Goods with Piracy and Heterogeneous Consumers

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