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Why the Music Industry May Gain from Free Downloading - the Role of Sampling
Martin Peitz University of Mannheim - Department of Economics Patrick Waelbroeck Ecole Nationale Superieure des Telecommunications October 2005 International University in Germany Working Paper No. 41/2005 Abstract: Downloading digital products for free may harm creators and intermediaries because consumers may no longer buy the version for sale. However, as we show in this paper, this negative effect may be overcompensated by a positive effect due to sampling: consumers are willing to pay more because the match between product characteristics and buyers' tastes are improved. This indeed holds under sufficient taste heterogeneity and product diversity.
Keywords: file-sharing, P2P, sampling, information transmission, piracy, music JEL Classifications: L11, L82 Working Paper SeriesDate posted: November 02, 2005 ; Last revised: November 10, 2005Suggested CitationContact Information
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