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Buying, Sharing and Renting Information Goods
Author(s) -
Varian Hal R.
Publication year - 2000
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00133
Subject(s) - renting , information good , value (mathematics) , business , production (economics) , commerce , marginal cost , microeconomics , industrial organization , computer science , economics , the internet , world wide web , political science , law , machine learning
Information goods such as books, journals, computer software, music and videos can be copied, shared, resold, or rented. When such opportunities for sharing are present, the content producer will generally sell a smaller amount at a higher price which may increase or decrease profits. I identify three circumstances where profits increase: (1) when the transactions cost of sharing is less than the marginal cost of production; (2) when content is viewed only a few times and transactions costs of sharing are low; and (3) when a sharing market provides a way to segment high‐value and low‐value users.