Gains from Digitization: Evidence from Gift-Giving in Music
44 Pages Posted: 28 Feb 2018
Date Written: February 27, 2018
In this paper, we focus on recorded music gifts during the holiday season and estimate the reduction in deadweight loss due to the transition from physical CD gift-giving to digital music gift-giving with gift cards. Based on our survey data, we find that music CD gifts generate an average deadweight loss between 15 and 38 percent of the price. According to our estimates of gift music album sales which are based on U.S. data, the welfare gains from digitization, in terms of eliminated deadweight loss as a percentage of total spending on music albums, were between 5 to 13 percent during the week when digital sales peak in 2014.
Keywords: Gift-giving, Deadweight loss, Digitization, Music
JEL Classification: D10, L82, O33
Suggested Citation: Suggested Citation