TY  - JOUR
AU  - Athey, Susan
AU  - Stern, Scott
TI  - The Nature and Incidence of Software Piracy: Evidence from Windows
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 19755
PY  - 2013
Y2  - December 2013
DO  - 10.3386/w19755
UR  - http://www.nber.org/papers/w19755
L1  - http://www.nber.org/papers/w19755.pdf
N1  - Author contact info:
Susan Athey
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305
Tel: 650/725-8696
Fax: 650/725-5702
E-Mail: athey@stanford.edu

Scott Stern
MIT Sloan School of Management
100 Main Street, E62-476
Cambridge, MA 02142
Tel: 617/253-3053
Fax: 617/253-2660
E-Mail: sstern@mit.edu
M1  - published as Susan Athey, Scott Stern. "The Nature and Incidence of Software Piracy: Evidence from Windows," in Avi Goldfarb, Shane M. Greenstein, and Catherine E. Tucker, editors, "Economic Analysis of the Digital Economy" University of Chicago Press (2015)

M3  - presented at "The Economics of Digitization: An Agenda", June 6-7, 2013
AB  - This paper evaluates the nature, relative incidence and drivers of software piracy.  In contrast to prior studies, we analyze data that allows us to measure piracy for a specific product - Windows 7 - which was associated with a significant level of private sector investment.  Using anonymized telemetry data, we are able to characterize the ways in which piracy occurs, the relative incidence of piracy across different economic and institutional environments, and the impact of enforcement efforts on choices to install pirated versus paid software.  We find that:  (a) the vast majority of "retail piracy" can be attributed to a small number of widely distributed "hacks" that are available through the Internet, (b) the incidence of piracy varies significantly with the microeconomic and institutional environment, and (c) software piracy primarily focuses on the most "advanced" version of Windows (Windows Ultimate).  After controlling for a small number of measures of institutional quality and broadband infrastructure, one important candidate driver of piracy - GDP per capita - has no significant impact on the observed piracy rate, while the innovation orientation of an economy is associated with a lower rate of piracy.  Finally, we are able to evaluate how piracy changes in response to country-specific anti-piracy enforcement efforts against specific peer-to-peer websites; overall, we find no systematic evidence that such enforcement efforts have had an impact on the incidence of software piracy.
ER  -