Institutional solutions to free-riding in peer-to-peer networks
A case study of online pirate communities
Originally published in Journal of Institutional Economics
This paper provides a case study of online pirate communities who use peer-to-peer networks to share copyrighted material illegally. Early scholars of peer-to-peer networks posited the possibility of a total network collapse due to issues of free-riding. When these networks are used to distribute copyrighted material illegally, the increased risk of legal punishment adds a further disincentive to contribute. This paper uses Ostrom's (2005) framework to categorize the rules used in pirate communities to solve collective action problems, evidencing the applicability and robustness of Ostrom's framework for self-governance under less favorable conditions. Through the use of boundary, position, information, and payoff rules, pirate communities are able to mitigate free-riding in the network.