Allan Fels and Henry Ergas argue in a submission to the government that new measures to target illicit downloading would blunt the motivation for rights holders to make their content available cheaply and quickly.

Pay television provider Foxtel acknowledges that recent moves to slash subscription costs and air hit shows such as Game of Thrones only hours after they are broadcast in the US have been driven in part by the growth of online piracy.

"By weakening the competitive pressure [copyright] infringement has placed on rights holders, and which has forced them to start reducing the extremely large gap between Australia and the US in pricing and availability in online video, the result will be that Australians will face higher prices," Mr Fels and Mr Ergas argue in their submission.

"The increase in non-infringing demand is likely to increase the price the copyright holder can charge, making legitimate consumers worse off, which in turn increases the incentive for piracy, offsetting the effects of stricter enforcement."

They also argue that companies would be discouraged from investing in more innovative ways to distribute their content - such as online video-on-demand services.

Mr Fels is a former chairman of the Australian Competition and Consumer Commission while Mr Ergas was chosen by the government as an expert panel member for its cost-benefit analysis of the National Broadband Network. Their paper was commissioned by the Australian Interactive Media Industry Alliance, whose members include Google, Yahoo! and eBay.

The government has proposed changing copyright law so that internet service providers (ISPs) can be held more responsible for their customers' illicit downloading and to make it easier for courts to block overseas sites hosting pirated content. 

"Their costs are significant while the community-wide benefits are dubious - it is not clear whether the proposals will do much to reduce piracy," they argue. "Certainly the government presents no evidence that the proposed policies are likely to produce net benefits."

They find the "vast bulk" of additional revenues earned through any anti-piracy scheme would flow to overseas companies because most of the programs Australians download illicitly are owned by overseas companies.

They also argue that illicit downloading can have economic benefits for rights holders - for example, more people seeing a movie can stimulate demand for associated video games or memorabilia.

Mr Ergas, who reviewed copyright law for the Howard government, said the government should conduct a rigorous cost-benefit analysis before introducing any legislation to tackle online piracy. This should include the economic and employment benefits for the local production sector.

He said the best outcome would be for rights holders and ISPs to negotiate a voluntary scheme to warn customers about repeated copyright infractions, with the costs paid for by rights holders. Otherwise, there would be an incentive for rights holders to over-use measures and use them in low-value cases. 

Foxtel spokesman Bruce Meagher said consumer demand for timely and affordable content would limit the scope for price rises.

"We don't want the government to set up a scheme so that we can piss our customers off," he said.

"We acknowledge that pricing and availability are a factor in piracy but so is enforcement. Even in places with low prices and easy availability people pirate. It's hard to compete against free."

Village Roadshow co-chairman Graham Burke said last week that film companies were releasing movies quicker and cheaper to discourage pirating.

Village Roadshow had made a "hell of a mistake" by delaying the release of the Australian-made The Lego Movie after its US release to coincide with local school holidays, he said.