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Gains from digitization: Evidence from gift-giving in music

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  • Bourreau, Marc
  • Doğan, Pınar

Abstract

In this paper, we focus on recorded music gifts during the holiday season and estimate the reduction in deadweight loss due to the transition from physical CD gift-giving to digital music gift-giving with gift cards. Based on our survey data, we find that music CD gifts generate an average deadweight loss between 15% and 38% of the price. According to our estimates of gift music album sales which are based on U.S. data, the welfare gains from digitization, in terms of eliminated deadweight loss as a percentage of total spending on music albums, were between 5% and 13% during the week when digital sales peak in 2014.

Suggested Citation

  • Bourreau, Marc & Doğan, Pınar, 2018. "Gains from digitization: Evidence from gift-giving in music," Journal of Economic Behavior & Organization, Elsevier, vol. 149(C), pages 106-122.
    • Handle: RePEc:eee:jeborg:v:149:y:2018:i:c:p:106-122
    DOI: 10.1016/j.jebo.2018.03.003
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    References listed on IDEAS

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    1. Joel Waldfogel, 2005. "Does Consumer Irrationality Trump Consumer Sovereignty?," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 691-696, November.
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    3. Peitz, Martin & Waelbroeck, Patrick, 2006. "Why the music industry may gain from free downloading -- The role of sampling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 907-913, September.
    4. Orit Tykocinski & Bradley J. Ruffle, 2000. "The Deadweight Loss of Christmas: Comment," American Economic Review, American Economic Association, vol. 90(1), pages 319-324, March.
    5. Waldfogel, Joel, 1993. "The Deadweight Loss of Christmas," American Economic Review, American Economic Association, vol. 83(5), pages 1328-1336, December.
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    9. Luis Aguiar & Joel Waldfogel, 2014. "Digitization, Copyright, and the Welfare Effects of Music Trade," JRC Working Papers on Digital Economy 2014-05, Joint Research Centre.
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    Cited by:

    1. Martina Pocchiari & Jason M.T. Roos, 2023. "The Heterogeneous Effect of Digitizing Community Activities on Community Participation," CESifo Working Paper Series 10841, CESifo.

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    More about this item

    Keywords

    Gift-giving; Deadweight loss; Digitization; Music;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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