Does file-sharing reduce DVD sales?

The short-term effect of BitTorrent file-sharing on movie DVD sales is estimated using sales data on newly released DVDs and torrent file downloads during a 13-week period between March and May 2009 in the USA. To overcome endogeneity between downloads and sales, the analysis is carried out in a dynamic panel setting. After controlling for an autoregressive component and a declining time trend in sales, the file-sharing elasticity of sales is not statistically different fromzero in the difference GMM estimations. The results hold when external instruments are used. Moreover, the results suggest an upper bound of -0.21 of elasticity, indicating that the short-term sales displacement effect is moderate at worst.