I think the classic supply-and-demand X chart might help illustrate things.
This simple graph illustrates how it works. If price and supply match (or come close enough to matching), then items purchased and items offered for sale are in equilibrium. If price is too low, suppliers don't supply enough to meet demand. If price is too high, there is a surplus. Simple enough in concept. In software sales, piracy occurs any time equilibrium is not present. If there is a shortage, piracy occurs because the software cannot be found easily in stores. If there is a surplus, piracy occurs because the existing product is too expensive in the eyes of many of those who pirate. Basically, the rate of piracy more or less equals the imbalance between price and supply (though you do have to take into account the authentic pirates who won't pay at any price for software; even at perfect equilibrium, there is piracy).
Sky Render - Sanity is for the weak.
