Download for Free - When Do Providers of Digital Goods Offer Free Samples?

Arbeitspapier

In a monopoly setting where consumers cannot observe the quality of the product we show that free samples which are of a lower quality than the marketed digital goods are used together with high prices as signals for a superior quality if the number of informed consumers is small and if the difference between the high and the low quality is not too small. Social welfare is higher, if the monopolist uses also free samples as signals, compared to a situation where he is restricted to pure price signalling. Both, the monopolist and consumers benefit from the additional signal.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 70

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Asymmetric and Private Information; Mechanism Design ; Information and Product Quality; Standardization and Compatibility
• Subject: Digital Goods ; Free Samples ; Multi-dimensional Signalling

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Boom, Anette
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2004

Further information

• DOI: doi:10.5282/ubm/epub.13480
• Handle: http://hdl.handle.net/10419/93801
• URN: urn:nbn:de:bvb:19-epub-13480-5
• Last update: 10.03.2025, 11:45 AM CET