How do Firms Make Money Selling Digital Goods Online? Flashcards
1
Q
What does a greater competitive intensity do with the profits?
A
It may increase the profits from charging for content and decrease the profits from advertising
2
Q
How can rigid price structures benefit content providers?
A
by providing them with a credible commitment device. When unable to commit to a price path, the firm should serve both purchase and rental markets.
3
Q
Which types of value-added services do information intermediaries provide?
A
they aggregrate information and provide access to the data, thereby facilitating reducing search and transaction costs, and they provide rating and feedback mechanisms to maintain the credibility of the marketplace.
