Pricing and Versioning Strategy for Information Products with No-Free-Disposal: The Role of Consumers’ Expectations Formation

Danqin Yang () and Juan Bai ()
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Danqin Yang: Nanjing University of Science and Technology
Juan Bai: Nanjing University of Science and Technology

A chapter in LISS 2020, 2021, pp 677-693 from Springer

Abstract: Abstract In this paper, we consider a monopolist providing two versions of products with no-free-disposal (NFD) in the information markets. Based on the maximization of profit and welfare, we get the optimal solutions in the case of exogenous quality and endogenous quality respectively depending on whether consumers’ expectation of market share is affected by price or not. Through analysis and comparison, we find that the optimal versioning strategy of the monopolist is a single high-quality version based the welfare maximizing. Compared to the case where consumers’ expectation is not affected by the market price, the monopolist can obtain more expected market share and profits by regulating the market price in the case where consumers’ expectation is affected by the market price.

Keywords: Versioning; Information goods; Pricing; Expectations; Free disposal; Network effects (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-33-4359-7_47

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DOI: 10.1007/978-981-33-4359-7_47

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