Screening in digital monopolies

Fuente: arXiv
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Autori principali: Dall'Ara, Pietro, Sartori, Elia
Natura: Preprint
Pubblicazione: 2026
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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