DURABILITY CHOICE AND THE PIRACY FOR PROFIT OF GOODS

We explore the impact of durable goods piracy in a simple two-period durability choice setting where an originator faces a future for-profit pirate that clones or duplicates copies of the durable good. We find that a social planner, as well as a monopoly originator, may well engage in a sort of 'reversed planned obsolescence'. In other words, they manufacture a product that is more durable than the first-best cost-minimizing level, if they cannot directly control the pirate. We show this occurs even in rental or committed sales settings, indicating Swan's market independence result does not hold here. Copyright � 2009 The Author. Journal compilation � 2009 Blackwell Publishing Ltd.