Lobbyin to prevent commercial piracy

Abstract

In this paper we develop a common agency model to analyze the problem of pirates entering the market, in which the incumbent and the consumers form pressure groups to lobby the government on policies to prevent piracy while the pirates try to avoid being stopped. We show that a monopoly is not an equilibrium when both the incumbent and consumers lobby the government, and that the cost of monitoring commercial piracy is very important in determining (truthful) equilibria, as is the case where there is no lobby competition. However, it is now more difficult getting the pirate to enter the market.