Abstract

Unauthorized duplication of microcomputer software is apparently commonplace. Recent decisions by major software publishers to drop "copy protection" may well result in even more unauthorized duplication. This paper addresses the impact of unauthorized software duplication on software publishers' profits. Software "clubs" of the type suggested by Buchanan (1965) are posited as providing a mechanism whereby software publishers can indirectly appropriate revenue for unauthorized software copies. It is shown that, under certain conditions, software publishers' profits may actually increase when users can make unauthorized copies.

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