models, markets, consumer-surplusI’ve noticed that a lot of companies offer their products in a “freemium” model, where they allow people to use the basic version of their product for free, then charge for premium features that go above and beyond. (Examples include Google Apps and Trello.)
How does this work? Economically, people have a willingness to pay at every price point. How is free/not free able to work? Does this basically give consumers all the surplus? Does this create any deadweight losses? Am I using the wrong consumer model?
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