Digital Goods Monopoly: A Folk Theorem

Zihao Li

Papers from arXiv.org

Abstract: We study a dynamic durable-goods monopoly model of differentiated digital goods. We establish a folk theorem: when both parties are sufficiently patient, any seller payoff ranging from the lowest buyer valuation up to approximately the static commitment monopoly payoff can be sustained in equilibrium. This result emerges from two fundamental characteristics unique to digital goods: free disposability on the buyer side and zero marginal cost on the seller side. Our analysis provides economic intuition consistent with empirical evidence documenting substantially higher markups in digital-intensive industries compared to traditional manufacturing sectors.

Date: 2025-07, Revised 2025-08
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2507.13137 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2507.13137

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().