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Toward an Understanding of Software Piracy in Developed and Emerging Economies
Abstract
The software industry loses billions of dollars annually to software piracy and has raised awareness of the high software piracy rates worldwide, particularly in emerging economies. In this paper, the authors build a general model of software piracy that includes three economic and social factors suggested by the literature, including per capita GNI, the relative size of a country’s IT market, and government corruption. The paper demonstrates that the relationship between national software piracy and per capita GNI is nonlinear, with additional gains in per capita GNI, producing marginally smaller reductions in software piracy. No structural variation is found in the model with respect to whether an economy is developed or emerging, using the OECD membership as a proxy. However, a structural break did exist with respect to the relative size of a country’s IT market. The analysis suggests that the classification of an economy as developed or emerging does not necessarily advance the understanding of the causal mechanisms that give rise to software piracy. Findings suggest that more insight can be gained by focusing on strategies that take into account the relative size of a country’s IT market.
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