Abstract
Following Danilov, Koshevoy, and Sotskov (1993, 1994, 1997, 1999a-b), we construct utility (price, cost) functions on a finite set of information commodities like computer programs, books, licenses, etc. Their distinction is that one needs their single instances, since additional copies provide no new information.
Every information commodity is regarded as a sum of certain innovations. An additive utility function (as well as price, or cost function) is defined as the sum of utilities of the underlying innovations. A supermodular (submodular) utility function reflects the decreasing (increasing) marginal effect of an additional innovation. These functions are used in an equilibrium model for a market of information commodities.
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Sotskov, A.I. (2002). Utility Functions, Prices, and Cost Functions on a Lattice of Information Commodities. In: Tangian, A.S., Gruber, J. (eds) Constructing and Applying Objective Functions. Lecture Notes in Economics and Mathematical Systems, vol 510. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-56038-5_6
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DOI: https://doi.org/10.1007/978-3-642-56038-5_6
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