The logic of the world wide web

Can anyone explain the economic logic of the world wide web to prior probability? (If you are an economist, just leave and close the door behind you.) Traditional business firms provide private goods and services at some positive (non-negative) price. What happens, however, when the price falls to zero? Economic theory predicts zero supply. Yet the world wide web follows a different logic. For example, check out this cool graphic from designtaxi. It’s amazing how some of the best websites on the internet, like Youtube, WordPress, and Google Search, are free.

Hat tip: David Zetland

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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