Interpersonal bundling

This paper studies a model of interpersonal bundling, in which a monopolist offers a good for sale under a regular price and a group purchase discount if the number of consumers in a group—the bundle size—belongs to some menu of intervals. We find that this is often a profitable selling strategy in response to demand uncertainty, and it can achieve the highest profit among all possible selling mechanisms. We explain how the profitability of interpersonal bundling with a minimum or maximum group size may depend on the nature of uncertainty and on parameters of the market environment, and we discuss strategic issues related to the optimal design and implementation of these bundling schemes. Our analysis sheds light on popular marketing practices such as group purchase discounts, and it offers insights on potential new marketing innovation

An Economic Analysis of Subscription Sharing of Digital Services

Subscription sharing, where one shares her premium digital services subscription with other users, has become common due to subscription-sharing platforms like Togetherprice, Gowd, and Sharesub. This raises a question: Does it still make economic sense to offer a menu of subscription plans (e.g., an individual plan as well as a discounted family plan)? In this study, we look at a monopolist service provider that offers both plans but faces the potential threat of subscription sharing. We analyze the optimal prices and the impact of sharing on profit, customer surplus, and overall society benefits. Our results indicate that even with subscription sharing, offering both plans is at least as profitable as only offering individual plans. Under certain conditions, subscription sharing can even boost profits. Furthermore, our numerical analysis suggests that subscription sharing can benefit society. These findings suggest that subscription sharing is not necessarily as troublesome as one would have expected

Online booking and information: competition and welfare consequences of review aggregators

Online review aggregators (e.g., booking.com or ClubKviar) provide detailed information about experience goods, such as restaurants and hotels. This study fosters the understanding of how such aggregators modify competition, profits and welfare. Using a spokes model of horizontal competition, I show that review aggregators enhance total welfare mainly by making valuable information available to consumers. The effect on welfare goes through different channels: 1) realised transactions are more valuable for the match between producers and consumers is more accurate; 2) the costumer base enlarges, for more agents find a suitable product; 3) the equilibrium price weakly decreases for competition amongst firms is more intense. However, firms face a prisoner dilemma: firms best response to the status quo is to appear on the aggregator's web so as to enlarge their market share, however, this leads to lower profits than if they all agreed not to use the aggregator

Estratégia de empacotamento para uma firma monopolista multiproduto : uma análise sob a perspectiva de modelos do tipo Principal-Agente

Trabalho de Conclusão de Curso (graduação) — Universidade de Brasília, Faculdade de Economia, Administração e Contabilidade, Departamento de Economia, 2021.Uma firma monopolista, que tem a capacidade de manipular os preços dos produtos que vende, deseja buscar a melhor estratégia possível para maximizar seus lucros. Porém, ela possivelmente irá enfrentar obstáculos como restrições legais e informação imperfeita sobre o mercado. Neste trabalho analisamos a situação de uma firma monopolista que atua em dois mercados diferentes e qual seria a melhor estratégia para essa firma: empacotamento (bundling) ou componentes puros (pure components). No empacotamento, a firma somente vende os dois bens de maneira conjunta, em um pacote, enquanto em componentes puros, ela vende os bens apenas de maneira separada. Para isso, usamos o modelo Principal-Agente com seleção adversa. Cada mercado possui dois tipos de consumidores, os que valoram pouco ou muito o bem em questão. Cada uma das situações é representada por uma maximização com algumas restrições, as quais podem ser simplificadas a ponto de se chegar a uma maximização sem restrições. Após determinar a expressão do lucro em cada situação, ambas em função da proporção μ de consumidores que valoram muito o bem e do spread de incerteza (diferença entre valoração alta ebaixa), é feita uma comparação entre ambas afim de determinar sob quais condições uma estratégia é superior à outra. A essa condição damos o nome de diferencial de lucro. Após isso, são feitas algumas simulações alterando os valores de μ e α e analisando como o diferencial de lucro se comporta. De maneira geral, conclui-se que existem valores para cada parâmetros pros quais o empacotamento sempre será melhor, independente do valor do outro. Entretanto, sempre que componentes puros é uma possível melhor opção para a firma, pode ocorrer uma alteração em algum dos parâmetros que torne o empacotamento mais vantajoso. Assim, a gama de situações nais quais o empacotamento é mais lucrativo é superior à gama de situações onde componentes puros é a melhor escolha.A monopolistic firm, which has the ability to manipulate the prices of the products it sells, wants to seek the best possible strategy to maximize its profits. However, it will possibly face obstacles such as legal restrictions and imperfect information about the market. This paper analyzes the situation of a monopolistic firm that operates in two different markets and what would be the best strategy for this firm: bundling or pure components. In bundling, the firm only sells the two goods together, in a package, while in pure components it sells the goods only separately. For this, the tooling of principal-agent models, which deal with adverse selection, was used. Each market has two types of consumers, those who have low or high valuation over the good. Each situation is represented by a maximization with some constraints, which can be simplified to the point of reaching an maximization without constraints. After determining the profit expression in each situation, both depending on the proportion μ of consumers who highly value the good and the uncertainty spread (difference between high and low valuation), a comparison is made between the two in order to determine under which conditions one strategy is superior to the other. We call this condition profit differential. After that, some simulations are made by changing the values μ and α and analyzing how the profit differential behaves. In general, it is concluded that there are values of each parameters for which bundling will always be better, regardless of the value of the other. Also, whenever pure components are a possible best option for the firm, a change in any of the parameters may occur that makes packaging more advantageous. Thus, the range of situations in which bundling is more profitable is superior to the range of situations where pure components is the best option

Bundled procurement

When procuring multiple products from competing firms, a buyer may choose separate purchase, pure bundling, or mixed bundling. We show that pure bundling will generate higher buyer surplus than both separate purchase and mixed bundling, provided that trade for each good is likely to be efficient. Pure bundling is superior because it intensifies the competition between firms by reducing their cost asymmetry. Mixed bundling is inferior because it allows firms to coordinate to the high prices associated with separate purchase. (Pure) bundling is more likely to be selected as a procurement strategy when: (i) the products' values are higher relative to their possible costs, (ii) costs for different goods are more negatively or less positively dependent, or (iii) the cost distribution of each product is more dispersed

Bundled procurement

When procuring multiple products from competing firms, a buyer may choose separate purchase, pure bundling, or mixed bundling. We show that pure bundling will generate higher buyer surplus than both separate purchase and mixed bundling, provided that trade for each good is likely to be efficient. Pure bundling is superior because it intensifies the competition between firms by reducing their cost asymmetry. Mixed bundling is inferior because it allows firms to coordinate to the high prices associated with separate purchase. (Pure) bundling is more likely to be selected as a procurement strategy when: (i) the products' values are higher relative to their possible costs, (ii) costs for different goods are more negatively or less positively dependent, or (iii) the cost distribution of each product is more dispersed

Annual report on research activities 2013/14

https://commons.ln.edu.hk/research_annual_report/1012/thumbnail.jp

Annual report on research activities 2014/15

https://commons.ln.edu.hk/research_annual_report/1013/thumbnail.jp