Network goods, piracy, and firm strategies in the global economy

Abstract

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT REQUEST OF AUTHOR.] This dissertation investigates network effects and the strategic reactions of firms in international markets. In particular, the reason of cross-country differences in software piracy rate and the strategic reaction of software producers are theoretically and empirically investigated. Five independent but interrelated research topics are included. First, income effect on critical mass and sustainable prices in the presence of network effects is studied theoretically. Second, how piracy changes critical mass and sustainable prices is investigated. Third, the existence of the direct income effect on the software piracy rate is empirically tested. Fourth, the nonlinear income inequality effect on software piracy is examined empirically. Fifth, the indirect network of the Internet effect on the software piracy rate is investigated theoretically. Our results imply that software producers can use online service as a piracy controlling tool. The findings of this dissertation are expected to contribute to understanding global emerging markets in the presence of network effects and synergistic effects between online services and brick-and-mortar businesses.