Researchers have acknowledged the existence of free-riding in peer-to-peer networks. Krishnan et al. (2002a) provide a plausible game theoretic explanation for the sustenance of cooperation in P2P networks and their ability to tolerate free-riding. Our paper investigates this issue further using a computational model. We find the Krishnan et al. (2002a) model to hold true only for a restricted set of assumptions. We argue that, in general, aggregation of individuals’ utility is necessary to explain the ability of P2P systems to tolerate free- riders. From our experiments we observe that the stability of the network is sensitive to the underlying incentive structure of individual users. We suggest a detailed incentive structure for users participating on the P2P network and examine this incentive structure in light of existing data of P2P usage. The findings of this paper should be useful to researchers and practitioners for policy making, network design, regulating growth, and deploying novel business models on P2P file sharing networks.