This paper analyzes the causes of illegal copying and its effects in the software market across 66
countries. By studying the aggregated and joint effects of different variables, the analysis shows that
supply constraints in the software market, shortage of after-sale support, and characteristics legal
framework are major drivers of illegal copying when controlling for income per capita. It also concludes
there is enough evidence to show there is a threshold of illegal copying over which its aggregated effect on
the software market is positive, and this is an efficient mechanism for market creation. Thus, allowing
illegal copying in some countries and at certain periods of time may be a profit generating decision in the
long-term, especially in countries with low-developed software markets and with presence of Open Source
software. For other hand, the results provide evidence to understand why proprietary software companies
would prefer enforcing their copyrights and intellectual property rights contingently and as result of a
rational decision-making process
