Free Can Make Cents

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How to think about “free” in competitive markets.

While “free” is certainly not a new concept, the types of situations in which free products are encountered and the effects of free products on the dynamics of competition have evolved.

In this article, authors Lesley Chiou of Occidental College and Avigail Kifer of Cornerstone Research offer an overview of products that are often priced for “free,” firms’ incentives for employing this pricing structure, and the importance of quality in assessing competition in the supply of “free” products.

This article was originally published in The Price Point by the Pricing Conduct Committee of the American Bar Association’s Section of Antitrust Law in September 2021.


The views expressed in this article are solely those of the authors, who are responsible for the content, and do not necessarily represent the views of Cornerstone Research.

Free Can Make Cents

Authors

Lesley Chiou

Professor of Economics,
Occidental College

  • New York

Avigail Kifer

Senior Manager