A Contribution to the Understanding of Illegal Copying of Software: Empirical and Analytical Evidence Against Conventional Wisdom

This paper analyzes the causes of illegal copying and its effects in the software market across 66countries. By studying the aggregated and joint effects of different variables, the analysis shows thatsupply constraints in the software market, shortage of after-sale support, and characteristics legalframework are major drivers of illegal copying when controlling for income per capita. It also concludesthere is enough evidence to show there is a threshold of illegal copying over which its aggregated effect onthe software market is positive, and this is an efficient mechanism for market creation. Thus, allowingillegal copying in some countries and at certain periods of time may be a profit generating decision in thelong-term, especially in countries with low-developed software markets and with presence of Open Sourcesoftware. For other hand, the results provide evidence to understand why proprietary software companieswould prefer enforcing their copyrights and intellectual property rights contingently and as result of arational decision-making process.