File sharing, technology adoption and policy analysis

This dissertation studies the extent to which online activity crowds out purchases. Chapter 2 examines the extent to which Internet file sharing crowds out purchases of both physical and digital music. The existing evidence on the effect of file sharing on music sales has been mixed and focused mainly on the period 1999-2001. Using a representative survey for 2004-2006, I find illegal downloads and legal music purchases are positively correlated across individuals. Since this correlation could reflect an unobserved taste for music, I instrument for the propensity to download illegally with the interaction of measures of ethical behavior and comfort with computer technology. Using both a standard probit estimation and a semiparametric estimation, I find legal music purchases and illegal music downloads are complements.;Chapter 3 investigates the effect of a change in local tax policy on Internet purchases and whether a reduction in sales tax increases offline purchases. Existing empirical research on tax policies and Internet goods suggest sales taxes have a positively and statistically significant effect on the probability of making purchases over the Internet. This chapter exploits the unexpected decline in New York state sales tax in June 2005 as a natural experiment. Controlling for individual characteristics, year effect, type of goods purchased, and geographic regions, the effect of the change in sales tax policy on Internet purchases is statistically indistinguishable from zero.;Chapter 4 examines whether viewing of web television stimulates or discourages traditional television viewings. This chapter is the first to use nationally representative data to examine the effect of Internet video on hours spent watching traditional television. In 2005, Internet video viewing has no effect on the hours spent watching traditional television. In 2006, viewers of Internet video are significantly more likely to spend more hours watching the traditional television.;Keywords. File Sharing, Taxation, Bivariate Probit, Intellectual Property Piracy;JEL classifications: C14, C21, C25, L86, O34...