NFT or Not to NFT: In Search of the Better Retail Sales Model for Creators

Posted: 17 Feb 2024

See all articles by Mariia Petryk

Mariia Petryk

George Mason University - Department of Information Systems and Operations Management

Date Written: February 5, 2024

Abstract

This paper explores the feasibility of the electronic sale model using non-fungible tokens (NFT) and smart contract functionality. We use the analytical modeling approach to formalize the benefits of the traceable token distribution model for the sellers and buyers. Our model predicts that the NFT model is a zero-sum game for buyers and sellers: When the NFT model is more profitable for the seller than the traditional retail model, the consumers are worse off. Nevertheless, the NFT model creates better outcomes for producers of the narrow set of durable goods that preserve their value above half of the original price in the secondary market. Using a 5-year dataset, we provide an empirical analysis of the creator’s revenue under the NFT model. Our findings are useful for the business managers and sellers of tokenized goods for maximizing their profits using marketplaces with traceability and social planner for the policy creation.

Keywords: non-fungible token, smart contracts, tokenization, blockchain, creators economy

Suggested Citation

Petryk, Mariia, NFT or Not to NFT: In Search of the Better Retail Sales Model for Creators (February 5, 2024). Available at SSRN: https://ssrn.com/abstract=4716554

Mariia Petryk (Contact Author)

George Mason University - Department of Information Systems and Operations Management ( email )

4400 University Drive
Fairfax, VA 22030
United States

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