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Multi-level markets and incentives for information goods

: Schmidt, A.U.


Information economics and policy 18 (2006), No.2, pp.125-138
ISSN: 0167-6245
Journal Article
Fraunhofer SIT ()
information good; multi-level market; virtual good; incentive; copyright protection

The free-rider phenomenon which impedes the marketing of information goods is conventionally countered by copyright protection regulations and technology. Alternative ways to market information goods, in particular through systems based on the super-distribution of a good from buyer to buyer, have recently raised some interest. Some of them mimic peer-to-peer file-sharing networks, while advanced ones are mechanisms falling into the category of multi-level markets. Motivated by this, the present paper develops a general model for the monetary flux in a multi-level market, quantitatively describing the incentives that buyers receive through resale revenues. Based on it, some qualitative questions pertaining to a profitable marketing of information goods are discussed.