Quite. Legality is really not that relevant when you look at the problem from pure market theory. The legality aspect does mean the piracy as a competitor has

Quite. Legality is really not that relevant when you look at the problem from pure market theory. The legality aspect does mean the piracy as a competitor has a weakness that can be exploited by other competitors — e.g., by lobbying for stricter laws or suing individuals, or by appealing to morality — but it is a competitor nonetheless, and acts as one.