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Buying, Sharing and Renting Information Goods

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  • Hal R. Varian

Abstract

Information goods such as books, journals, computer software, music and videos can be copied, shared, resold, or rented. When such opportunities for sharing are present, the content producer will generally sell a smaller amount at a higher price which may increase or decrease profits. I identify three circumstances where profits increase: (1) when the transactions cost of sharing is less than the marginal cost of production; (2) when content is viewed only a few times and transactions costs of sharing are low; and (3) when a sharing market provides a way to segment high‐value and low‐value users.

Suggested Citation

  • Hal R. Varian, 2000. "Buying, Sharing and Renting Information Goods," Journal of Industrial Economics, Wiley Blackwell, vol. 48(4), pages 473-488, December.
    • Handle: RePEc:bla:jindec:v:48:y:2000:i:4:p:473-488
    DOI: 10.1111/1467-6451.00133
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