"Download for Free": When do providers of digital goods offer free samples?
In a monopoly setting where consumers cannot observe the quality of the product we show that free samples which are of a lower quality than the marketed digital goods are used together with high prices as signals for a superior quality if the number of informed consumers is small and if the difference between the high and the low quality is not too small. Social welfare is higher, if the monopolist uses also free samples as signals, compared to a situation where he is restricted to pure price signalling. Both, the monopolist and consumers benefit from the additional signal.
|Date of creation:||2004|
|Contact details of provider:|| Postal: Garystr. 21, 14195 Berlin (Dahlem)|
Phone: (030) 838 2272
Fax: (030) 838 2129
Web page: http://www.wiwiss.fu-berlin.de/en/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sabine Stephan, 2002.
"German Exports to the Euro Area,"
Discussion Papers of DIW Berlin
286, DIW Berlin, German Institute for Economic Research.
- Sébastien Lecocq & Thierry Magnac & Marie-Laure Pichery & Michael Visser, 1999.
"The Impact of Information on Wine Auction Prices : Results of an Experiment,"
99-36, Centre de Recherche en Economie et Statistique.
- Sébastien Lecocq & Thierry Magnac & Marie-Claude Pichery & Michael Visser, 2005. "The impact of information on wine auction prices: results of an experiment," Annals of Economics and Statistics, GENES, issue 77, pages 37-57.
- Sebastien Lecocq & Thierry Magnac & Marie-Claude Pichery & Michael Visser, 2004. "The impact of information on wine auction prices: results of an experiment," Research Unit Working Papers 0401, Laboratoire d'Economie Appliquee, INRA.
- Moraga-Gonzalez, Jose Luis, 2000.
"Quality uncertainty and informative advertising,"
International Journal of Industrial Organization,
Elsevier, vol. 18(4), pages 615-640, May.
- In-Koo Cho & David M. Kreps, 1997.
"Signaling Games and Stable Equilibria,"
Levine's Working Paper Archive
896, David K. Levine.
- Paul R. Milgrom & John Roberts, 1984.
"Price and Advertising Signals of Product Quality,"
Cowles Foundation Discussion Papers
709, Cowles Foundation for Research in Economics, Yale University.
- Kamp, Brad, 1998. "Complimentarily yours: Free examination copies and textbook prices: Comment," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 527-533, July.
- repec:crs:wpaper:9936 is not listed on IDEAS
- Berger, Helge & Hefeker, Carsten, 2004.
"One country, one vote? Labor market structure and voting rights in the ECB,"
2004/10, Free University Berlin, School of Business & Economics.
- Berger, Helge & Hefeker, Carsten, 2005. "One Country, One Vote? Labor Market Structure and Voting Rights in the ECB," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 672-687.
- Helge Berger & Carsten Hefeker, 2004. "One Country, One Vote? Labor Market Structure and Voting Rights in the ECB," CESifo Working Paper Series 1165, CESifo Group Munich.
- Kyle Bagwell & Michael Riordan, 1988.
"High and Declining Prices Signal Product Quality,"
808, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- repec:adr:anecst:y:2005:i:77:p:05 is not listed on IDEAS
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Orzach, Ram & Overgaard, Per Baltzer & Tauman, Yair, 2002.
"Modest Advertising Signals Strength,"
RAND Journal of Economics,
The RAND Corporation, vol. 33(2), pages 340-358, Summer.
- Kyle Bagwell & Per Baltzer Overgaard, 2005. "Look How Little I’m Advertising!," CIE Discussion Papers 2005-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Hao Zhao, 2000. "Raising Awareness and Signaling Quality to Uninformed Consumers: A Price-Advertising Model," Marketing Science, INFORMS, vol. 19(4), pages 390-396, January.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- James J. Anton & Dennis A. Yao, 2002. "The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 513-531.
- Volckart, Oliver & Wolf, Nikolaus, 2004. "Estimating medieval market integration: Evidence from exchange rates," Discussion Papers 2004/21, Free University Berlin, School of Business & Economics.
- Foster, James E. & Horowitz, Andrew W., 1996. "Complimentarily yours: Free examination copies and textbook prices," International Journal of Industrial Organization, Elsevier, vol. 14(1), pages 85-99.
When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:200428. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.