This paper analyzes the impact of music file sharing on CD purchases. Traditionally, two arguments are opposed concerning the impact of music file sharing on CD sales. On the one hand, MP3 downloads only reduces sales of legitimate CDs (the competition effect). On the other hand, consumption of...

We use a 1998-2002 cross-section dataset to analyze the claim of losses due to internet piracy made by the record industry. The results suggest that internet piracy played a significant role in the decline in music sales during the early days of file-sharing networks