In an attempt to protect their intellectual property and compete effectively in an increasingly dynamic marketplace, software publishers have employed a number of preventive and deterrent controls to counter software piracy. Conventional wisdom suggests that reducing piracy will force consumers to acquire software legitimately, thus increasing firm profits. We develop an analytical model to test the implications of antipiracy measures on publisher profits. Our results suggest that preventive controls decrease profits and deterrent controls can potentially increase profits. Empirical results are also presented that support the proposition on the impact of deterrent controls on the extent of software piracy derived from the analytical model.
Key words and phrases: computer ethics , economics of software , information systems controls , software piracy , software pricing