Demand and supply responses of digital goods protected by intellectual property rights to advances in digital technologies

This thesis is composed of three articles. The first article estimates the effect of music downloads on the probability of purchasing music using a European individual level cross section of 15,000 people from October 2001. A simple comparison of means shows that people who regularly download music online are more likely to buy music. The positive relationship persists when controlling for observed characteristics. However, simultaneity between tastes for music and peer-to peer usage makes it difficult to isolate the causal effect of music downloads on music purchases. To break that simultaneity, this article uses measures of internet sophistication and the speed of the internet connection as instruments. The results suggest that peer-to-peer usage reduces the probability of buying music by an average of 30%. Based on my estimates, back of the envelope calculations indicate that without file sharing sales in 2002 would have been around 7.8 percent higher.; The second article uses country level data to investigate to what extent the recent reduction on music sales is a consequence of file sharing. I find that countries with higher internet and broadband penetration have suffered a higher drop in music sales, suggesting that music downloads explains the recent reduction in sales. I also find some evidence that file sharing may explain a change in the composition of sales by types of repertoires; with a reduction in the participation of sales of music that are being shared more heavily.; The last article studies how advances in digital technologies have affected the timing of releases of movies in international markets. Using data on the date of theatrical release of movies I am able to document that, for top movies, the time length between the date of theatrical release of movies in the US and the date of release abroad has significantly dropped in recent years. Top movies are being released on average 40 days faster compare to the mid 90s. I analyze alternative explanations to this finding, including fear of commercial (DVD) piracy, fear of file sharing and new marketing strategies employing the internet.