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Please use this identifier to cite or link to this item: http://hdl.handle.net/10481/31514

Title: Learning by coping
Authors: Martínez-Sánchez, Francisco
Issue Date: 2008
Abstract: We analyze the behavior of a multiproduct monopolist, a duopolist and consumers who are able to learn by copying. We show that when the effect of learning by copying is strong and the cost of copying is low enough, consumers decide to copy all goods, independently of their prices. This suggests that the DRM systems implemented by the digital industry have adverse consequences, because they hinder the use of original information goods and provide consumers with an incentive for copying. Moreover, we obtain two more kinds of equilibrium: one where each firm sells to the consumer who values its good more highly and another where each firm sells to all consumers. These results are robust when we consider that consumers’ preferences are “opposed.” Finally, by analyzing social welfare we show that, from a static perspective, the multiproduct monopoly provides a welfare at least as great as the duopoly and, from a dynamic perspective, a duopolist has at least the same incentive to create a new product as a monopolist.
Sponsorship: Financial support from Spanish MCYT under the Project SEJ2007-62081/ECON.
Publisher: Universidad de Granada. Departamento de Teoría e Historia Económica
Series/Report no.: The Papers;08/05
Keywords: Consumers
Learning by coping
Opposed preferences
DRM
Copy
Piracy
URI: http://hdl.handle.net/10481/31514
Rights : Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License
Citation: Martínez-Sánchez, F. Learning by coping. Universidad de Granada. Departamento de Teoría e Historia Económica (2008). (The Papers; 08/05). [http://hdl.handle.net/10481/31514]
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