Why pirate software and DVDs are popular in mainland China?

Yang Yang

Econ1001B

November 28th

Copyright infringement

Piracy:unauthorized reproduction and distribution of various products

Focus: software and CD/DVD

Outline

Why high cost for genuine products

Why low cost for pirate products

Why people buy pirate products

Why high cost for genuine products

High R&D expenditure

After-sale service

Monopoly

Example

90 USD

1998RMB

1998 = 90 x 8.3 x 2.67

Why low price for pirate prodcuts

No start-up cost Software replicated and CD/DVD burned

easily No taxes (illegal) A mature producing line

Economic profit in the long run?

30

20

15

10

5

Cost:2

Buyers

High reservation price

large consumer surpluses Same quality

Budget constraint

Utility Functions

U’

U”Y’/Y”

X’

X”

genuine pirate

Any solutions?

Thank you