Coasian Dynamics with Free Disposability and Zero Marginal Cost: Information Goods

Zihao Li

Papers from arXiv.org

Abstract: This paper studies a durable goods monopoly with multiple provision levels, free disposability, and zero marginal cost. We establish a Folk-Theorem-type result: as parties become sufficiently patient, equilibrium seller payoffs contains an interval bounded below by the lowest-type buyer's efficient surplus and above by the maximal static payoff under incentive-compatible mechanisms guaranteeing that type efficient provision. This multiplicity arises because free disposability and zero marginal cost render the efficient provision level non-unique. Our analysis demonstrates how structural features common in information goods can undermine the Coase conjecture.

Date: 2025-07, Revised 2026-02
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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