This paper analyzes the incentive for the free internet newspaper service of the monopolistic newspaper through clarifying external variables and internal variables that have affect on the strategic decision for profit maximization of the monopolistic newspaper. The basic model was based on the vertically differentiated model of Tirole.
I show that with the certain condition for the external variables, the free internet newspaper service is profit maximization strategy of the monopolistic newspaper for selling offline newspaper more expensively to some users who have high taste parameters. In particular, I find reasonable size of the external variables from materials of relative institutes and show that the real conditions for the external variables satisfy the incentive for the free internet newspaper service of the monopolistic newspaper.
