A theoretical analysis of product versioning in the context of commercial piracy

The study develops a vertically differentiated duopoly model in the presence of commercial piracy with two groups of consumers, a business group and a home group, with the former having higher willingness to pay for the product. A firm producing an original information good sells it with...

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Main Authors: Basu Paulomi, Banerjee Tanmoyee
Format: Article
Language:English
Published: Faculty of Economics, Belgrade 2018-01-01
Series:Ekonomski Anali
Subjects:
Online Access:http://www.doiserbia.nb.rs/img/doi/0013-3264/2018/0013-32641819115B.pdf
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spelling doaj-319c02768fed4332989fb368935765de2020-11-25T00:16:05ZengFaculty of Economics, BelgradeEkonomski Anali0013-32641820-73752018-01-016321911513510.2298/EKA1819115B0013-32641819115BA theoretical analysis of product versioning in the context of commercial piracyBasu Paulomi0Banerjee Tanmoyee1Jadavpur University, Department of Economics, IndiaJadavpur University, Department of Economics, IndiaThe study develops a vertically differentiated duopoly model in the presence of commercial piracy with two groups of consumers, a business group and a home group, with the former having higher willingness to pay for the product. A firm producing an original information good sells it with endogenously chosen product quality and acts as a price leader, and the commercial pirate becomes the price follower. There exists a stringent government policy of monitoring commercial piracy, which increases the marginal cost of the pirate. We study and compare the two regimes of no-versioning (selling a single quality product) and product versioning (selling products with different price and quality combinations to different consumer groups). In the versioning regime, depending upon demand and government monitoring parameters, two equilibria are observed. Comparing the original firm’s profit in each of these versioning cases suggests that versioning may or may not be the original firm’s optimal strategy in the presence of commercial piracy. This result is counterintuitive to existing literature on product versioning in the context of enduser piracy.http://www.doiserbia.nb.rs/img/doi/0013-3264/2018/0013-32641819115B.pdfintellectual property rightproduct-versioningcommercial piracyheterogeneityquality
collection DOAJ
language English
format Article
sources DOAJ
author Basu Paulomi
Banerjee Tanmoyee
spellingShingle Basu Paulomi
Banerjee Tanmoyee
A theoretical analysis of product versioning in the context of commercial piracy
Ekonomski Anali
intellectual property right
product-versioning
commercial piracy
heterogeneity
quality
author_facet Basu Paulomi
Banerjee Tanmoyee
author_sort Basu Paulomi
title A theoretical analysis of product versioning in the context of commercial piracy
title_short A theoretical analysis of product versioning in the context of commercial piracy
title_full A theoretical analysis of product versioning in the context of commercial piracy
title_fullStr A theoretical analysis of product versioning in the context of commercial piracy
title_full_unstemmed A theoretical analysis of product versioning in the context of commercial piracy
title_sort theoretical analysis of product versioning in the context of commercial piracy
publisher Faculty of Economics, Belgrade
series Ekonomski Anali
issn 0013-3264
1820-7375
publishDate 2018-01-01
description The study develops a vertically differentiated duopoly model in the presence of commercial piracy with two groups of consumers, a business group and a home group, with the former having higher willingness to pay for the product. A firm producing an original information good sells it with endogenously chosen product quality and acts as a price leader, and the commercial pirate becomes the price follower. There exists a stringent government policy of monitoring commercial piracy, which increases the marginal cost of the pirate. We study and compare the two regimes of no-versioning (selling a single quality product) and product versioning (selling products with different price and quality combinations to different consumer groups). In the versioning regime, depending upon demand and government monitoring parameters, two equilibria are observed. Comparing the original firm’s profit in each of these versioning cases suggests that versioning may or may not be the original firm’s optimal strategy in the presence of commercial piracy. This result is counterintuitive to existing literature on product versioning in the context of enduser piracy.
topic intellectual property right
product-versioning
commercial piracy
heterogeneity
quality
url http://www.doiserbia.nb.rs/img/doi/0013-3264/2018/0013-32641819115B.pdf
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