The impact of piracy on the structure of the Pay TV market: a case study for Latin America

Abstract

ABSTRACTThe purpose of this paper is to show that piracy affects competition by reducing the ability of operators to enter and expand in the market. We expect this to be reflected in a more concentrated market. We empirically assess this by employing an unbalanced panel data set for 17 countries in Latin America (years 2013–2015). By using the Herfindahl Hirshman Index (HHI) as an indicator of market concentration, we find that halving piracy reduces market concentration by 6.5% in markets where the HHI index is above 1500. When controlling for endogeneity, halving piracy reduces market concentration by 11–15% for all levels of HHI. Since in most Pay TV markets in Latin America the HHI is above 1500, the results suggest that fighting piracy is a tool for promoting competition.