Template-Type: ReDIF-Paper 1.0
Title: On Strategic Enabling of Product Piracy in the Market for Video Games
Author-Name: Oliver Gürtler
Author-Email: oliver.guertler@uni-bonn.de
Classification-JEL: D21, L13, L85
Keywords: Video Games Market, Product Piracy, Fundamental Transformation
Abstract: In this paper, we consider the market for video games, where some firms are active in 
	both, the market for video games hardware and software. It is puzzling that hardware can 
	be easily made compatible with duplicated (i.e. pirated) software. We ask, whether there 
	exist strategic reasons explaining this puzzle. Firms may, for example, enable software 
	piracy in order to increase their market shares in the hardware market. This will indeed 
	be true, if hardware prices are fixed and the market is completely covered. With endogenous
	prices, however, price reactions to enabling of product piracy will offset the increase in 
	market shares and copy protection will be set at the highest possible level. If, on the 
	other hand, the market is only partially covered, copy protection will be strategically 
	reduced. In doing so, hardware firms shift reservation prices from the software to the 
	more important hardware market.
Note: 
Length: 29
Creation-Date: 2005-11
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse36_2005.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse36_2005