Competition with clone: An analysis of the role of illegal copy

Abstract

The efficiency of a market depends on the amount of information about products available to buyers. However, an information goods market is not an efficient market because information goods are mostly experience goods. We suggest that illegal copying can be an efficient information channel to account for the problem. We also suggest that partially enforced copyright protection may encourage the competition between the original information goods and illegally copied goods that benefits not only customers but also producers. © Springer Science+Business Media, LLC. 2008.