Special Issue in Honor of Leon A. Petrosyan; Guest Editors: Vladimir Mazalov and David YeungNo Access

Price Competition on the Market of Counterfeiting Software

Nikolay Zenkevich

Graduate School of Management, St. Petersburg State University, Volkhovsky per., 3, St. Petersburg, 199004, Russia

E-mail Address: zenkevich@gsom.pu.ru

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and

Margarita Gladkova

Graduate School of Management, St. Petersburg State University, Volkhovsky per., 3, St. Petersburg, 199004, Russia

E-mail Address: gladkova@gsom.pu.ru

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https://doi.org/10.1142/S0219198916400065Cited by:0 (Source: Crossref)

Abstract

In this paper, the market of software products is considered. Regularly this market is suffering from existence of counterfeit or pirate products which causes problems and challenges for original software developers. Taking this fact into account the paper is trying to solve the problem of price competition on this market. The software company set the price and the quality of the software product while the counterfeit or pirate company suggests the consumers the product of the lower quality. First the general model is analyzed and price equilibrium is defined. Second, the monopoly case is considered separately and optimal software price is defined. Finally, it is supposed that there are two companies that produce original software on the market who compete and differentiate in product quality, and there are two pirate companies who produce the same type of software. The duopoly case is analyzed and equilibrium prices for competing companies are obtained in the explicit form.

Keywords:

AMSC: C72, K42, L13

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