Heterogeneous consumers make the decision to buy a durable good or to download a replica, and a monopolist chooses to price and protect their intellectual property in the form of an authentication cost. An optimal price and authentication cost is derived, and shown to be higher than the efficient outcome for a uniform distribution of consumers. The optimal selection of price and protection are shown to be commensurate with his authenticating technology, and the searching ability of consumers. As an extension, a layout for a monopolist problem where consumers have different searching abilities is shown to be indistinct from a homogeneous case when consumers are uniformly distributed.
Bachelor of Science (B.S.)
College of Business Administration
Length of Campus-only Access
Camilo, Amil, "A Model of Low-risk Piracy" (2019). Honors Undergraduate Theses. 495.