Software pricing and copyright enforcement: private profit vis-a-vis social welfare

The incentive to copy software depends on the publisher’s price and monitoring strategy. This paper analyzes how a publisher’s strategy depends on the penalty for copyright violation. It shows that changes in price and monitoring have qualitatively different effects on potential users. Both affect users’ choice between copying and buying. Only monitoring reduces the expected benefit of those who copy and affects users’ choice between copying and not using. Hence, society should favor dealing with piracy through price rather than monitoring.