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On the Impact of Digital Music Distribution

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  • Illtae Ahn
  • Kiho Yoon

Abstract

We present a framework to evaluate the impact of digital music distribution. We set up a representative model that enables the comparative static analysis. We then interpret two empirical observations about the music industry, the sales decline and the price constancy, and fit the model to these observations. We find that, while the impact of digitalization on the producers' profits is probably negative, it may not be as severe as the observed impact on the quantity. On the other hand, the impact of digitalization on the consumer surplus is unambiguously positive. The impact on the social welfare is rather ambiguous in general, but the social welfare may increase for plausible parameter values. (JEL codes: K11, L86, O34) Copyright , Oxford University Press.

Suggested Citation

  • Illtae Ahn & Kiho Yoon, 2009. "On the Impact of Digital Music Distribution," CESifo Economic Studies, CESifo Group, vol. 55(2), pages 306-325, June.
    • Handle: RePEc:oup:cesifo:v:55:y:2009:i:2:p:306-325
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifn036
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    Cited by:

    1. Alexander Cuntz (a) And Yi Qian (b), 2021. "The Impacts of Counterfeiting on Corporate Investment," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 46(2), pages 1-40, June.
    2. Ahn, Illtae & Shin, Ilsoon, 2010. "On the optimal level of protection in DRM," Information Economics and Policy, Elsevier, vol. 22(4), pages 341-353, December.
    3. Anthony Koschmann & Yi Qian, 2020. "Latent Estimation of Piracy Quality and its Effect on Revenues and Distribution: The Case of Motion Pictures," NBER Working Papers 27649, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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