Monetizing digital content with network effects: A mechanism-design approach

Vincent Meisner and Pascal Pillath

No 49, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: We design the profit-maximizing mechanism to sell an excludable and non-rival good with network effects. Buyers have heterogeneous private values that depend on how many others also consume the good. In optimum, an endogenous number of the highest types shares consumption, and we provide an algorithm that implements this allocation in dominant strategies. We apply our insights to digital content creation, and we are able to rationalize features seen in monetization schemes in this industry such as voluntary contributions, community subsidies, and exclusivity bids.

Keywords: Mechanism design; non-rival goods; club goods; network effects; digital content; creator economy (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2024-09-20
New Economics Papers: this item is included in nep-des, nep-gth, nep-inv, nep-mic, nep-pay and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0049

DOI: 10.48462/opus4-5605

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