Determinants of software piracy: economics, institutions, and technology

This paper determines the various influences on software piracy using a large sample of countries. In particular, our cross-sectional study estimates the effects of economic, institutional and technical factors on the piracy of software. A more comprehensive look at potential determinants of software piracy, including economic and non-economic factors, may be considered as the main contribution to a literature that is still in its infancy. Results show that a country’s stage of development and the quality of governance have the largest impact on the incidence of software piracy. Greater economic and political freedoms are shown to have opposite effects on piracy. Further, greater diffusion of the Internet and of computer technologies, other things equal, actually promote the legal use of software. Higher access prices also reduce piracy, with the impact of telephone charges being more pronounced than that of Internet access fees. There are significant variations in the impacts of different types of legal institutions and of fractionalization on piracy. The influence of digital divide between rural and urban areas does not significantly affect the piracy of software. Overall, economic, institutional, and technological factors exert important influences on software piracy, albeit with some qualitative and quantitative differences. Policy implications are discussed.