Salon.com: Profits from Piracy

“Starting with a 1994 paper by Amherst researcher Lisa N.
Takeyama, economists and policy researchers began advancing the
argument that having a large illegal user base might actually boost
vendor profitability. In a 1999 paper titled ‘A Strategic Approach
to Software Protection’ economists Oz Shy and Jacques Thisse
examined instances in which companies faced with certain
duopolistic market settings dropped software protection as a
marketing strategy and benefited from the decision.

“Osorio’s working paper, which has yet to be published, advances
the argument into a new realm. Instead of looking at competition
between proprietary software vendors, Osorio looks specifically at
competition between proprietary and open-source software vendors
unhindered by piracy concerns. Not surprisingly, his research takes
him to the Chinese marketplace, where recent government investment
in software research has resulted in a number of open-source
spinoffs, most notably the Beijing-based operating systems vendor
Red Flag Linux…”

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