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

Vincent Meisner and Pascal Pillath

Papers from arXiv.org

Abstract: We design profit-maximizing mechanisms to sell an excludable and non-rival good with positive and/or negative 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 consume the good, and we can implement 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.

Date: 2024-08, Revised 2025-03
New Economics Papers: this item is included in nep-des, nep-gth, nep-mic, nep-pay and nep-reg
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