Research on Quality Selection and Anti-Piracy Policy of Vendors under Network Externalities

Abstract

In view of the existence of pirated products in the market, this paper studies the pirate manufacturers, genuine manufacturers and consumer game models, and discusses the impact of the existence of pirate manufacturers on the quality selection of genuine manufacturers under the condition of network externalities. The study found that network externality enhancement will enable genuine manufacturers to improve product quality to bring more utility to consumers. Under certain conditions, the level of counterfeiting of pirated manufacturers is the key to whether a genuine manufacturer chooses a regulatory policy; when the level of counterfeiting is low, the role of the market mechanism itself can effectively protect legitimate manufacturers, and when the level of counterfeiting is high, the adjustment of the market mechanism is not enough to protect the genuine manufacturers. At this time, the genuine manufacturers will implement the policy of combating piracy to protect the genuine.