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Methods for Presenting Real-world Objects Under Controlled Laboratory Conditions
Published on: June 21, 2019
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To sell public or private goods.
Simon Loertscher1, Leslie M Marx2
1Department of Economics, University of Melbourne, Level 4, FBE Building, 111 Barry Street, Victoria, 3010 Australia.
Review of Economic Design
|April 16, 2024
Summary
Sellers can choose to offer digital assets as private or public goods. Public goods can yield higher profits than private goods, especially with many buyers and moderate production costs.
Area of Science:
- Economics
- Digital Markets
- Behavioral Economics
Background:
- Traditional economic models assume goods are inherently public or private.
- Technological advancements, like non-fungible tokens (NFTs), allow designers to control rivalry.
- This shifts the public vs. private nature of goods into a strategic choice.
Purpose of the Study:
- To determine when a profit-maximizing seller should offer an asset as a private good versus a public good.
- To analyze the quantity-exclusivity tradeoff for digital goods.
- To identify conditions favoring public good provision for profitability.
Main Methods:
- Theoretical economic modeling.
- Analysis of a profit-maximizing seller's decision.
- Comparison of profit functions for public and private good provision.
- Examination of factors including production cost and buyer value distribution.
Main Results:
- Profits from public goods can exceed those from private goods due to collecting numerous small payments versus a single large one.
- Public good provision is profitable when production costs are moderately high.
- Public good profits are unbounded with more buyers, unlike private good profits.
Conclusions:
- The choice between public and private good provision is a strategic decision for sellers.
- Digital goods, like NFTs, enable this strategic flexibility.
- Under specific conditions (moderate costs, positive buyer values), public goods offer superior profit potential.
