Effects of Cultural Content Piracy and Enforcement on Inbound Contents Tourism

A growing middle-income class in developing and emerging countries has creating new demand for travels to foreign countries. In spite of a new coronavirus, this phenomenon will not stop in the long run. Selection of specific destinations is apparently influenced by an interest in foreign cultures. People see information daily about foreign cultures through the Internet, and they often purchase related content and goods, like music CDs, books, game software and so on. However, they purchase not only originals but also fakes in developing countries where, under lax enforcement of intellectual property rights (IPRs), consumers accept copied goods as second-tier substitutes. This paper considers the effects of Japanese cultural content and related goods, including fakes, on inbound tourism demand. I first theoretically prove a discrepancy between IPR holders and the tourism industry in perceived desirable enforcement and then indicate that it disappears if the secondary market of cultural content and goods is relatively large. Otherwise, IPR and tourism incentives conflict with each other regarding levels of enforcement. Second, I consider a scheme to compensate for tourism-caused damage from IPR infringement when optimal enforcement levels differ.