ABSTRACT
Digital piracy is often complicated by anonymous online coalitions (that thwart enforcement efforts) and offline/online coordination by digital pirates. Such coordination is often complex and can be intended or unintended and both observable and unobservable. Thus, customer experience and firm profitability can be vastly improved by developing new models of stochastic dominance (SD) in P2P networks. Such SD models incorporate a prioritization scheme where the priority is defined not only in terms of customers’ opportunity costs (waiting time, search costs, etc.) but also in terms of willingness-to-comply with IP laws, prepurchase, and post-purchase regret, customer’s relative wealth, and customer’s marginal propensity-to-substitute digital products. The new SD models can minimize the firm’s production/delivery costs and can also result in lower perceived prices for high-priority customers and uniform QoS for all customers, all of which are socially more optimal outcomes when different customers place different values on compliance with IP laws.
