Pricing, Technology, and Enforcement in Markets with Digital Piracy: A Hotelling Approach
Published:
Abstract
We analyze the strategic interaction between an original content provider and a pirate firm in a spatial Hotelling framework. The model accounts for technological difficulty and probabilistic enforcement as determinants of consumer adoption and firm profits. Under uniform distributions, we derive closed-form equilibrium prices, technological effort, and market shares. Comparative statics reveal how enforcement intensity, technological barriers, and pirate revenue parameters shape equilibrium outcomes. While the original and pirate firms are pure substitutes in market share, their pricing and technological strategies display strategic complementarities. The results clarify how regulatory interventions and technological investments influence market power and profitability. By combining analytical tractability with flexible specifications for pirate costs and revenues, the framework provides clear insights for policymakers and managers addressing digital piracy.
Recommended citation:
Mishra, Abhijeet and Sahu, Prabhat, Pricing, Technology, and Enforcement in Markets with Digital Piracy: A Hotelling Approach (February 14, 2026). Available at SSRN: https://ssrn.com/abstract=6237059 or http://dx.doi.org/10.2139/ssrn.6237059