Article | Journal of Economic Perspectives | summer 2009

Priced and Unpriced Online Markets

by Benjamin Edelman

Abstract

With forces both supporting and opposing zero prices, typical Internet-related activities—like surfing the web, web searches, and e-mail, along with behind-the-scenes practices like domain names and the allocation of IP (Internet Protocol) addresses—present a natural context to reevaluate our sense of the tradeoffs that arise between free and a positive price. In this piece, I offer a series of specific examples of resources offered without charge, for a positive price, or for a flat fee ("all-you-can-eat"). I conclude by assessing the characteristics that shape pricing structure for these resources.

Keywords: Cost vs Benefits; Price; Market Transactions; Service Operations; Internet;

Citation:

Edelman, Benjamin. "Priced and Unpriced Online Markets." Journal of Economic Perspectives (summer 2009): 21–36.