Friday, 18 March, 2011 | 10:00 | Defense

Jiří Střelický: “Essays on Pricing, Product Quality, and Intellectual Property Rights Protection in the Software Market”

Dissertation Committee:
Avner Shaked (chair)
Krešimir Žigić (local chair)
Andreas Ortmann



In this thesis, I explore the particular issues of pricing, product quality selection, and intellectual property rights (IPR) protection in the software market. In the first part of the thesis, I study price discrimination in a monopolistic software market. The monopolist charges different prices for the upgrade version and for the full version. Consumers are heterogeneous in taste for software that is infinitely durable and there is no resale. I show that price discrimination leads to a higher software quality but raises both absolute price and price per quality. This price discrimination decreases the total number of consumers compared to no discrimination. Finally, such discrimination decreases consumers' surplus but increases the developer's profit and social welfare that attains the social optimum in the limit. In the second part of the thesis, I focus on the interaction between a regulator's IPR protection policy against software piracy on the one side and the forms of IPR protection that software producers may themselves undertake to protect their IPR on the other side. Two developers, each offering a variety of different quality, compete for heterogeneous users who choose among purchasing a legal version, using an illegal copy, and not using a product at all. Using an illegal version violates IPR and is thus punishable when disclosed. If a developer considers the level of piracy as high, he can introduce a form of private protection for his product. I examine the above issues within the framework where the quality of each developer's product is exogenously given, and the developers compete in prices.

Full Text: “Essays on Pricing, Product Quality, and Intellectual Property Rights Protection in the Software Market” by Jiří Střelický