Peer-to-peer file sharing communities

Peer-to-peer file sharing communities present a paradox for standard public goods theory, which predicts that free-riding should preclude the success of the community. We present a model in which users choose their level of sharing, downloading, and listening in the presence of sharing costs and endogenous downloading costs. In our model, sharing emerges endogenously, largely as a byproduct of users’ attempts to reduce own-costs. ∗Cunningham: Department of Economics, U. S. Naval Academy, email: [email protected]. Alexander: Federal Communications Commission, email: [email protected]. Adilov: Department of Economics, Cornell University. We thank David Sappington for his many insightful and useful comments. The usual caveat applies.