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Zero Marginal Cost and Virtual Rent

  • Sheng HongEmail author
Chapter
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Abstract

In microeconomics, the belief is that as long as the price is equal to the marginal cost, resource allocation is efficient. However, the marginal costs of the trade platforms on the Internet are almost zero. How could they cover their costs? This chapter presents that these trade platforms can gather people densely, bring about market network externalities, and generate virtual rents. These trade platforms can have virtual rents under the names of usage fees, trade commissions, and competing ranks, and can receive income under the condition of a zero price to enter and cover their costs and earn their profits.

Keywords

Internet Zero marginal cost Virtual rent 

References

  1. Alibaba, Alibaba Group Holding Limited Index to Financial Statements, 2017. https://www.sec.gov/Archives/edgar/data/1577552/000104746916013400/a2228766z20-f.htm.
  2. Coase, The Marginal Cost Controversy, Economica, New Series, Vol. 13, No. 51 (Aug., 1946), pp. 169–182.Google Scholar
  3. Steven Cheung, Theory of Share Tenancy, Arcadia Press, 2000.Google Scholar
  4. 盛洪, “永佃制的经济性质”, 《制度经济学评论》, 2014 年第 4 期; (Sheng Hong, “The Economic Nature of Permanent Tenancy”, Review of Institutional Economics, No. 4, 2014)Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.Unirule Institute of EconomicsBeijingChina

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