The Virtual Commons: Why Free-Riding Can Be Tolerated in File Sharing Networks

Peer-to-peer networks have emerged as a popular alternative to traditional client-server architectures for the distribution of information goods. Recent academic studies have observed high levels of free-riding in various peer-to-peer networks, leading some to suggest the imminent collapse of these communities as a viable information sharing mechanism. Our research develops an analytic model to analyze the behavior of P2P networks in the presence of free-riding. In contrast to previous predictions we find that P2P networks can operate effectively in the presence of significant free-riding. In future work we plan to explore how much peer- to-peer network performance could be improved if free-riding were eliminated and discuss both the costs and benefits of managerial mechanisms to limit free-riding

Uncovering the effects of digital movie format availability on physical movie sales

The impact of multi-channel technology-enabled digital goods on the sales of the physical counterpart faces uncertainty in the electronic commerce domain. We address the issue empirically by identifying the effect of the availability of digitally-delivered movies on physical DVD movie sales. Unique to our study is our interest in not only purchased digital goods but rented digital goods as well. We construct a robust panel dataset consisting of movie data collected from Amazon and Barnes and Noble on the same day for every movie observed. A key feature of our dataset is the multi-channel availability of digital purchase and digital rental movie formats at Amazon. Our results show that the availability of the digital purchase format does not have a significant effect on DVD sales. Surprisingly, the availability of the digital rental format is associated with a significant reduction in DVD sales. The results imply that a product substitution effect may be occurring between the digital rental and the physical DVD purchase of the same movie. We conduct robustness tests to show under which conditions the effect is greatest. Our results also provide practical implications to inform strategies regarding movie format release windows.24 month embargo; published online: 6 November 2018This item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at [email protected]

The impact of shopbot use on prices and price dispersion: Evidence from online book retailing

Internet price search tools, notably shopbots, have reduced consumers' search costs for price and product characteristics. While a variety of analytic models predict that increased consumer search will lower price levels among competing retailers, there is no consensus in the literature as to how price dispersion will change with increased consumer search. Moreover, there are no papers that have empirically tested these predictions using direct observation of variation in shopbot use over time. This paper examines the impact of changes in shopbot use over time on pricing behavior in the Internet book market. We do this by combining price and clickstream data collected from August 1999 to July 2001 -- a period of rapid expansion in shopbot use. We find that a 1% increase in shopbot use is correlated with a $0.41 decrease in price levels and a 1.1% decrease in price dispersion.Search cost Shopbot Clickstream Internet Price dispersion

Digital Business Models for Peer-to-Peer Networks: Analysis and Economic Issue

Peer-to-peer (P2P) services allow users to share networked resources, notably bandwidth and content, from the edges of the network. These services have been popularized because of file sharing – particularly the sharing of unlicensed copyrighted files. However, content owners are increasingly exploring the ability of peer-to-peer networks to accommodate legitimate content distribution and promotion. In this article, we review the economic characteristics of P2P networks and outline the implications of these characteristics on efforts to counteract illegal piracy and on potential uses of P2P networks in a commercial media distribution strategy.

The Impact of Shopbot Use on Prices and Price Dispersion: Evidence from Online Book Retailing

The growth of Internet price search tools, notably shopbots, has reduced consumers’ search costs for price and some product characteristics. While a variety of analytic models predict that increased consumer search through shopbots will lower price levels among competing retailers, there is no consensus in the empirical literature as to whether price dispersion will increase or decrease in response to increased consumer search through shopbots. Moreover, there are no papers that have empirically tested these predictions using direct observation of variation in shopbot use over time. This paper examines the impact of changes in shopbot use over time on pricing behavior in the Internet book market. Using price data obtained from a leading shopbot, combined with clickstream data on shopbot usage from August 1999 to July 2001, we show that an increase of 1% in shopbot use is correlated with a $0.41 decrease in price levels, after controlling for product and market characteristics. We also show that price dispersion decreases with shopbot use in a non-linear fashion. These findings are robust to controlling for potential simultaneity bias and the possible influence of prominent retailers, bestsellers, seasonality, and structural changes in the online book industr

Gaining Trust Through Online Privacy Protection: Self-Regulation, Mandatory Standards, or Caveat Emptor

Trust is particularly important in online markets to facilitate the transfer of sensitive consumer information to online retailers. In electronic markets, various proposals have been made to facilitate these information transfers. We develop analytic models of hidden information to analyze the effectiveness of these regimes to build trust and their efficiency in terms of social welfare. We find that firms' ability to influence consumer beliefs about trust depends on whether firms can send unambiguous signals to consumers regarding their intention of protecting privacy. Ambiguous signals can lead to a breakdown of consumer trust, while the clarity and credibility of the signal under industry self-regulation can lead to enhanced trust and improved social welfare. Our results also indicate that although overarching government regulations can enhance consumer trust, regulation may not be socially optimal in all environments because of lower profit margins for firms and higher prices for consumers

Digital Business Models for Peer-to-Peer Networks: Analysis and Economic Issue

Peer-to-peer (P2P) services allow users to share networked resources, notably bandwidth and content, from the edges of the network. These services have been popularized because of file sharing particularly the sharing of unlicensed copyrighted files. However, content owners are increasingly exploring the ability of peer-to-peer networks to accommodate legitimate content distribution and promotion. In this article, we review the economic characteristics of P2P networks and outline the implications of these characteristics on efforts to counteract illegal piracy and on potential uses of P2P networks in a commercial media distribution strategy.