Economics of Piracy

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This discussion paper will explore the impact of piracy of intellectual property to U.S. and global economies as it relates to the economic principles of opportunity cost and voluntary exchange.
As we learned from our reading in chapters 13 and 18 of the textbook, Survey of Economics, the authors, O'Sullivan, Sheffrin, and Perez, review concepts of monopolies and comparative advantage in terms of international trade and finance. And our text suggests that the world is growing more and more global which creates new sets of challenges for citizens and governments. Furthermore, our text suggests that one of the costs of being active in the international marketplace is compromised intellectual property (IP).
So what exactly is IP? According to authors of the textbook, Fundamentals of Information Systems, intellectual property is defined as works of the mind, and provides examples such as art, books, films, music, inventions, formulas, and processes that are distinct and “owned” or created by a single person or group. Furthermore, the authors state, intellectual property can include software and may be protected by copyright and patent laws (Stair & Reynolds, 2012, pg. 419). Furthermore, the authors define software piracy as the act of unauthorized procurement through means of copying, downloading, sharing, selling, or installing of software (Stair & Reynolds, 2012, pg. 419).
Also, the authors of our Economics textbook state that publishers of both books and computer software face problems of unauthorized copying, particularly in some developing countries. While residents of those countries clearly benefit from inexpensively copied books or software, producers in the developed countries then face reduced incentive to enter the ma...

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Kain, Erik. (January 15, 2012). Does Piracy Cause Economic Harm? How to Think
About Economic Frontiers. Forbes Online. (
O'Sullivan, A., Sheffrin, S. M., & Perez, S. J. (2014). Survey of Economics:
Principles, Applications, and Tools (6th edition). United States of America: Pearson Education.
Phillips, Macon. (January 14, 2012). Obama Administration Responds to
We the People Petitions on SOPA and Online Piracy. The White House Blog. (
Stair, R., & Reynolds, G. (2012). Fundamentals of Information Systems. (6th edition).
Boston, MA: Course Technology, Cengage Learning.

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