> So why do people pay for 'free' information? (and yes some don't, this isn't a piracy discussion). Given these sorts of questions I've been working on what it is that gives information value. What are the economics of information?
Of course it might be interesting to ask how digital goods are different from tangible objects in economics. But this particular question is made on a wrong assumption. Digital goods can be scarce and hence not "free" by definition.
> But back to the Parse discussion, one of the factors that appears to influence information value is its rarity, or difficulty in obtaining.
Yes, but that's no different from the classical concept of scarcity.
> My claim is that classic economic supply and demand models don't apply to digital goods because the supply of the goods can be infinite and the classic model suggests prices would go to zero in that scenario.
No, no, it doesn't suggest that. That's the problem with your argument. The theory might say that that happens in a world of "perfect competition", which is a very strong assumption. As long as someone has the publishing rights for a digital good, its low marginal cost doesn't imply higher supply and lower price.
This is not really limited to digital goods. Take a hardcover textbook or a cancer-treatment drug: its marginal cost might be a few dollars but given limited supply it can still sell for over $100.
Of course it might be interesting to ask how digital goods are different from tangible objects in economics. But this particular question is made on a wrong assumption. Digital goods can be scarce and hence not "free" by definition.
> But back to the Parse discussion, one of the factors that appears to influence information value is its rarity, or difficulty in obtaining.
Yes, but that's no different from the classical concept of scarcity.
> My claim is that classic economic supply and demand models don't apply to digital goods because the supply of the goods can be infinite and the classic model suggests prices would go to zero in that scenario.
No, no, it doesn't suggest that. That's the problem with your argument. The theory might say that that happens in a world of "perfect competition", which is a very strong assumption. As long as someone has the publishing rights for a digital good, its low marginal cost doesn't imply higher supply and lower price.
This is not really limited to digital goods. Take a hardcover textbook or a cancer-treatment drug: its marginal cost might be a few dollars but given limited supply it can still sell for over $100.