Effect of piracy on innovation in the presence of network externality
نویسندگان
چکیده
The joint impact of piracy and network externality increases the R&D investment of a single firm if the network effect dominates the piracy effect. With R&D competition, if the firms “significantly” differ with respect to the efficiency in R&D investment and if the piracy effect dominates the network effect then the less efficient firm‟s investment increases and that of the more efficient firm‟s decreases. The reverse holds if the network effect dominates the piracy effect. If the firms are “less” asymmetric then their R&D investment either increases or decreases depending on the relative strengths of the piracy and network effects. JEL Classification: D21, D43, L13, L21, L26, O3.
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