Software Piracy: Estimation of Lost Sales and the Impact on Software Diffusion

Givon, Moshe; Mahajan, Vijay; Muller, Eitan

doi:10.2307/1252012

Cited by 188 publications

(189 citation statements)

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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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“…Mahajan et al (2000) point out that new product diffusion models have two different strategic decisions: prelaunch/launch decisions vs. postlaunch decisions. In postlaunch diffusion research, Mahajan et al (2000) illustrate six applications: timing of successive generations, capacity decisions with product diffusion (Jain et al, 1991;Ho, Savin and Terwiesch, 2002), determining the market value on anticipated penetration (Kim, Mahajan and Srivastava, 1995), market saturation assessment and expansion opportunity for the retailers (Mahajan, Sharma, and Kerin, 1988), estimation of lost sales due to pirated sales (Givon, Mahajan and Muller, 1995), and lost sales due to patent infringements (Mahajan, Sharma, and Buzzell, 1993).…”

Section: Multi-function Productsmentioning

confidence: 99%

Single firm product diffusion model for single-function and fusion products

Chen¹,

Carrillo²

2011

European Journal of Operational Research

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The prosperity of multifunction products (also referred to as fusion products) has changed the landscape of the marketplace for several electronics products. To illustrate, as fusion products gain popularity in cellular phones and office machines, we observe that single-function products (e.g., stand-alone PDAs and stand-alone scanners) gradually disappear from the market as they are supplanted by fusion products. This paper presents a product diffusion model that captures the diffusion transition from two distinct single-function products into one fusion product. We investigate the optimal launch time of the fusion product in various conditions and conduct a numerical analysis to demonstrate the dynamics among the three products. Similar to previous multi-generation single product diffusion models, we find that the planning horizon, the products' relative profit margin, and substitution effects are important to the launch time decision. However, there are several unique factors that warrant special consideration when a firm introduces a fusion product to the market: the firm's competitive role, buyer consolidation of purchases to a multifunction product, the fusion technology and the age of current single-function products.

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“…On the empirical side, Givon, Mahajan, and Muller (1995) estimate the degree to which an increase in illegal use of software boosts the demand for buying legal copies. Using data on spreadsheets and word processors in England, they show that although six of every seven software users used pirated copies, these pirates were responsible for attracting more than 80 percent of new software buyers, thereby significantly increasing the legal diffusion of software.…”

Section: Copying and Piracymentioning

confidence: 99%