Screening in digital monopolies
Fuente:
arXiv
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| Autori principali: | , |
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| Natura: | Preprint |
| Pubblicazione: |
2026
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| _version_ | 1866908872890908672 |
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| author | Dall'Ara, Pietro Sartori, Elia |
| author_facet | Dall'Ara, Pietro Sartori, Elia |
| contents | A defining feature of digital goods is that replication and degradation are costless: once a high-quality good is produced, low-quality versions can be created and distributed at no additional cost. This paper studies quality-based screening in markets for digital goods. Production costs depend only on the highest quality supplied, unlike in standard screening models. The monopolist allocation exhibits two interdependent inefficiencies. First, a productive inefficiency: the monopolist underinvests in the highest quality relative to the efficiency benchmark. Second, due to a distributional inefficiency, certain buyers receive degraded versions of the produced good. Competition exacerbates productive inefficiency, but improves distributional efficiency. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2602_13014 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Screening in digital monopolies Dall'Ara, Pietro Sartori, Elia Theoretical Economics A defining feature of digital goods is that replication and degradation are costless: once a high-quality good is produced, low-quality versions can be created and distributed at no additional cost. This paper studies quality-based screening in markets for digital goods. Production costs depend only on the highest quality supplied, unlike in standard screening models. The monopolist allocation exhibits two interdependent inefficiencies. First, a productive inefficiency: the monopolist underinvests in the highest quality relative to the efficiency benchmark. Second, due to a distributional inefficiency, certain buyers receive degraded versions of the produced good. Competition exacerbates productive inefficiency, but improves distributional efficiency. |
| title | Screening in digital monopolies |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2602.13014 |