Experience Goods Monopolist: Freeware as an Advertisement

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.