Experience Goods Monopolist: Freeware as an Advertisement

Le Duc Niem

Le Duc Niem, Department of Economics, Tay Nguyen University, 567 Le Duan Street, Buon Ma Thuot City, Vietnam, Tel: 84-964061111, Fax: 84-5003825184 leniem@gmail.com

JEL Classification: L86, D83, D42

Abstract

This study examines the situation in which a monopolist offers freeware as an advertisement for the increase of demand to maximize profit even though the existence of such freeware will reduce the power of the monopolist in the market. This study proves that the successful application of freeware is dependent on the number of potential consumers and the optimal quality design for freeware in this situation uniquely exists.

Keywords:

Freeware, Software, Advertisement

Acknowledgments

The author gratefully acknowledges helpful comments and suggestions of anonymous referees of this journal.

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