Heavy Lifting - thoughts and web finds by an economist
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Thursday, February 18, 2010
A humorous and true comparison of the legitimate and pirated DVD/movie.
The implicit economics in the graphic is that the legit DVD raises transaction/user costs for the consumer. Some consumers are willing to tolerate these higher costs, whether because they think the legit version is of higher quality or they feel some responsibility to compensate the artists and distributor of the movie.
Those individuals who put a higher value on their time or have a shorter attention span view the increased transactions costs as more onerous and are more likely to seek out alternatives - such as pirated versions.
Distributors might put the trailers and the menus to signal that the product is legit and not pirated, it is at least one way to signal that the movie is not counterfeit. However, the benefits to the end consumer of a legit version might not be as great as the costs they impose, which makes it possible for the legit and the pirated versions to co-exist, perhaps indefinitely.
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