Incentive Systems in Multi-Level Markets for Virtual Goods

Andreas U. Schmidt

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arXiv · cs/0409028

Incentive Systems in Multi-Level Markets for Virtual Goods

Andreas U. Schmidt

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Abstract

As an alternative to rigid DRM measures, ways of marketing virtual goods through multi-level or networked marketing have raised some interest. This report is a first approach to multi-level markets for virtual goods from the viewpoint of theoretical economy. A generic, kinematic model for the monetary flow in multi-level markets, which quantitatively describes the incentives that buyers receive through resales revenues, is devised. Building on it, the competition of goods is examined in a dynamical, utility-theoretic model enabling, in particular, a treatment of the free-rider problem. The most important implications for the design of multi-level market mechanisms for virtual goods, or multi-level incentive management systems, are outlined.

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Andreas U. Schmidt. 2005-06-17. Incentive Systems in Multi-Level Markets for Virtual Goods. https://arxiv.org/abs/cs/0409028

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