Ahn and Yooney (2008)
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Source Details
| Ahn and Yooney (2008) | |
| Title: | On the Impact of Digital Music Distribution |
| Author(s): | Illtae Ahn and Kiho Yoony |
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| About the Data | |
| Data Description: | Literature review |
| Data Type: | Secondary data |
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| Cross Country Study?: | No |
| Comparative Study?: | No |
| Literature review?: | Yes |
| Government or policy study?: | No |
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Abstract
We present a framework to evaluate the impact of digital music distribution. We set up a representative model that enables the comparative static analysis. We then interpret two empirical observations about the music industry, the sales decline and the price constancy, and fit the model to these observations. We find that, while the impact of digitalization on the producers’ profits is probably negative, it may not be as severe as the observed impact on the quantity. On the other hand, the impact of digitalization on the consumer surplus is unambiguously positive. The impact on the social welfare is rather ambiguous in general, but the social welfare may increase for plausible parameter values.
Main Results of the Study
- First, though the producers’ profits have probably shrunk,the decrease may not be as severe as the observed sales decline.
- Second, the consumer surplus has unambiguously increased.
- Third, the social welfare may have increased for plausible parameter values.
