Information Goods

Economics 103

According to Enrico Coiera is more than one characteristic of “information goods”. For starters “information goods “you must experience information before you are able to know what it is. For example if you have never driven a car you would not know if worth doing. If you never rode a bike you would not know if it’s worth buying a bike. Secondly, the cost to initially create information products is higher than the cost to reproduce them. Thirdly you can copy digital information without the risk of losing the original information. Finally the cost of transporting digital information is low.

Information goods differ from normal goods and services in a number of ways. One would be that information goods are not actually consumed and can be reproduced and distributed at little to no cost; it is so cheap to produce information goods then what it would cost to produce a normal good. Information goods can be reproduce numerous times without the losing any information, while when reproducing normal goods you risk losing or damaging the good. Also, information goods are intangible; while normal goods and services can be tangible some examples of this would be a piece of fruit or receiving a body massage. An information good that I use would be ITunes it gives you samples of the music before you purchase it.

In order for producer to make a profit they will need to first do what all companies do to maximize their revenue and that is to minimize their exposure to competition. There is a number of ways to accomplish this. The first thing many producers of information do is find creative ways to sell their information. For example a producer can bundle software together with other items. This will in essence make the cost less than it would if the products were sold separately. In addition to that the consumer will receive the total package as opposed to just getting individual products. From a consumers point of view you may not need the total...