Under CopyrightSchmidt, A.U.A.U.Schmidt2022-03-1016.4.20092005https://publica.fraunhofer.de/handle/publica/34932110.24406/publica-fhg-349321As an alternative to rigid DRM measures, ways of marketing virtual goods through multi-level or networked marketing have raised some interest. This report is a first approach to multi-level markets for virtual goods from the viewpoint of theoretical economy. A generic, kinematic model for the monetary flow in multi-level markets, which quantitatively describes the incentives that buyers receive through resales revenues, is devised. Building on it, the competition of goods is examined in a dynamical, utilitytheoretic model enabling, in particular, a treatment of the free-rider problem. The most important implications for the design of multi-level market mechanisms for virtual goods, or multi-level incentive management systems, are outlined.enmulti-level marketincentivefree-rider problemcompetitionE-Commerce005004conference paper