Why Do Fans Buy Albums They Can’t Play? The Economics of Product Purchasing Contests

A Research Showcase Series lecture

This research introduces "Product Purchasing Contests," emerging market practices widely adopted in loyalty-driven industries such as music, fashion, luxury goods, livestreaming platforms (e.g., Twitch), and crowdfunding, where firms directly monetize consumer competition. For example, in the K-pop industry, fans who purchase more albums gain a higher chance of winning opportunities to meet their favorite artists. As a result, despite the rise of digital streaming, music companies sell enormous quantities of otherwise outdated physical albums, raising public concerns about consumer exploitation through wasteful spending. Unlike traditional money-based contests, consumption-based competition imposes production costs on firms while also delivering some utility to consumers. To study how such practices can be profitable and how regulatory intervention may affect them, Seongyeob Kim develops a mathematical framework that analyzes firms’ optimal design choices and welfare implications.

Seongyeob Kim is a Ph.D. candidate in Economics and studies how firms act as institutional designers, strategically designing market rules beyond solely setting price. His research highlights firms’ growing ability to use consumer competition to reshape consumer behavior and market outcomes. From this perspective, he analyzes the structural and policy implications of emerging market institutions and practices.

This lecture recording can be found on the Available Recordings page approximately two business days after the event and will remain accessible for three weeks.