Confessions of an Internet Monopolist: Demand Estimation for a Versioned Information Good

We investigate profit-maximizing versioning plans for an information goods monopolist. The analysis employs data obtained from a web-based field experiment in which potential buyers were offered information goods in varied price-quality configurations. Maximum simulated likelihood (MSL) methods are used to estimate parameters describing the distribution of utility function parameters across potential buyers of the good. The resulting estimates are used to examine the impact of versioning on seller profits and market efficiency.Versioning, price discrimination, field experiment, maximum simulated likelihood

Competition, Incomplete Discrimination and Versioning

Producers of software viewers commonly other basic versions of their products for free while more sophisticated versions are highly priced, thereby providing less attractive or lower valuations consumers with larger utility levels.We give some foundations to this outcome called versioning.We consider a duopoly in which firms other di erentiated goods to a representative consumer; the buyer has distinct marginal valuations for the quality of the products; each producer perfectly knows the consumers taste for its own product, but remains uninformed about its taste for the rivals product.When each product cannot be purchased in isolation of the other one, a phenomenon of endogenous preferences arises since a firms o er to the consumer depends on the information unknown by the rival firm.Multiple equilibria emerge and the consumers rent increases with his valuation for one product and decreases with the valuation for the other product.By contrast, when each product can be purchased in isolation of the other one, at the unique equilibrium consumers with larger valuations for a product earn higher rents.The analysis is undertaken under two alternative pricing policies: in the partially-discriminatory case, producers make use of the known information only; in the fully-discriminatory case, each producer second-degree price discriminates the consumer according to the unknown information.We show that, sometimes, firms prefer partial to full discrimination, i.e., strategic ignorance of consumers tastes for the rival brand softens competition.competition;prices

Information, competition and (In) complete discrimination

Nous considérons une firme qui génère un risque pour l'environnement via son activité industrielle et qui a une information privée à la fois sur son effort de précaution et sur le montant de ses actifs. Nous étudions l'interaction entre l'audit ex ante de l'effort de précaution par un régulateur et la vérification ex post de la capacité financière par un juge en cas d'accident. Du point de vue des incitations, les deux instruments sont utiles. Le policy-mix optimal dépend de la règle gouvernant l'intervention ex post et de l'efficience de l'intervention ex ante.

Would You Like to Be a Prosumer? Information Revelation, Personalization and Price Discrimination in Electronic Markets

Electronic commerce and flexible manufacturing allow personalization of initially standardized products at low cost. Will customers provide the information necessary for personalization? Assuming that a consumer can control the amount of information revealed, we analyse how his decision interacts with the pricing strategy of a monopolist who may abuse the information to obtain a larger share of total surplus. We consider two scenarios, one where consumers have different tastes but identical willingness to pay and another with high and low valuation customers. In both cases full revelation may only result if the monopolist can commit to a maximum price before consumers decide about disclosure.E-Commerce, Personalization, Asymmetric information, Price discrimination

Pricing economics of video games:a panel data study on the effects of versioning on revenue

Abstract. The video game industry has seen major changes in the 21st century. The industry has experienced exponential growth as digital markets have enabled the usage of new business and pricing models which differ from the traditional retail trade of boxed goods. Meanwhile, the technological development and demand for more complex games has caused the production costs of video games to rise. This thesis analyses the video game industry and the price determination of its products, video games. Under the scope are both the traditional pricing economics of video games, as well as the recently emerged new pricing and business models, which according to the economic pricing theory fall under versioning type price discrimination. The research methods of this thesis include a literature review on the pricing economics of the video game industry, as well as an empirical panel data study on revenue gathering within the firms of the industry. The focus of the econometric research is to build a simple model to capture the main factors of revenue making among 7 big publishers of the industry between the years 2000 and 2020. Included factors are the quantitative data on published products, their qualities, and the pricing models used. The results of the study add to the existing literature by providing quantitative results on the usage of different versioning type pricing models. The findings show that using microtransactions and expansive type downloadable content accounts for a significant share of the industry growth, while using the free- to-play model combined with these types of versioning tools also generates significantly more revenue compared to the traditional retail model. The amounts of mobile and multiplatform games released also had explanatory power over the revenues, while console games, qualities of games, and the usage of the subscription model did not play a significant part in explaining revenue gathering within the firms of the study

Would you like to be a prosumer? Information revelation, personalization and price discrimination in electronic markets

Electronic commerce and flexible manufacturing allow personalization of initially standardized products at low cost. Will customers provide the information necessary for personalization? Assuming that a consumer can control the amount of information revealed, we analyze how his decision interacts with the pricing strategy of a monopolist who may abuse the information to obtain a larger share of total surplus. We consider two scenarios, one where consumers have different tastes but identical willingness to pay and another with high and low valuation customers. In both cases full revelation may only result if the monopolist can commit to a maximum price before consumers decide about disclosure. -- Elektronischer Handel und flexible Produktionstechnologien ermöglichen eine kostengünstige Personalisierung ehemals standardisierter Produkte, allerdings benötigt der Produzent hierfür Informationen vom Kunden über dessen Präferenzen. Ausgehend von der Annahme, dass die Kunden selbst darüber entscheiden können, in welchem Ausmaß sie diese Informationen preisgeben, wird hier analysiert, wie diese Entscheidung des Kunden mit der Preispolitik eines Monopolisten interagiert, der mit Hilfe zusätzlicher Informationen zwar das Produkt besser an die Wünsche des Kunden anzupassen vermag, sein Wissen allerdings auch dazu missbrauchen kann, sich einen größeren Anteil des Handelsgewinns anzueignen. Bei heterogenen Präferenzen der Konsumenten zeigt sich sowohl für den Fall einer einheitlichen Zahlungsbereitschaft, als auch für den Fall unterschiedlicher Kundentypen mit hoher und niedriger Zahlungsbereitschaft, dass die Konsumenten nur dann zu einer vollständigen Informationsrevelation bereit sind, wenn sich der Monopolist im Vorfeld der Revelationsentscheidung glaubhaft an ein Preisschema binden kann.E-Commerce,Personalization,Asymmetric information,Price discrimination,Elektronische Märkte,Personalisierung,Asymmetrische Information,Preisdiskriminierung

ESSAYS ON DYNAMIC PRICING AND BUNDLING IN SUBSCRIPTION MARKETS

This dissertation consists of two essays that investigate dynamic pricing and bundling strategies in subscription markets. In the first essay, we analyze the dynamic price discrimination strategies of a monopolist offering new services on a subscription basis. In subscription markets, the pricing policy can be based on customers’ past purchase behavior (behavioral price discrimination) and time of purchase (intertemporal price discrimination). In the presence of uncertainty regarding the value of new features and heterogeneity in consumer valuations of the existing features, we investigate the profits and rate of adoption of new technology that can be achieved with each pricing strategy. When the prior heterogeneity in consumer valuation of the existing features is relatively large, the monopolist can improve his profits by committing to ignore consumer past behavior and varying prices based only on time. We also study the role of commitment power of the monopolist to announce future prices and correlation in valuations of the new and existing features. In the second essay, we investigate the multi-product pricing strategies of a sequentially innovating monopolist introducing new services. The new service can either represent a new functionality not directly related to the existing service or an enhancement to the existing services. When the existing service is offered in multiple versions, the monopolist can sell the new service separately or bundle the new service with some or all versions of the primary service. We analyze two pricing strategies that represent the two extremes of a spectrum of bundling strategies that a monopolist offering such services can practice: Discriminative Bundling (DB) and Independent Pricing (IP). Using the discriminative bundling (DB) strategy, a service provider offering multiple versions of the primary service bundles the new service only with higher versions of the primary service while selling it separately to remaining customers. Using the independent pricing strategy (IP), the service provider offers the new service separately to all consumers including those buying lower and higher end versions. We find that the comparison of the two strategies in terms of profits depends on the nature of the new service and the general distribution of consumer valuations for the new and the primary services

Digital piracy : theory

This article reviews recent theoretical contributions on digital piracy. It starts by elaborating on the reasons for intellectual property protection, by reporting a few facts about copyright protection, and by examining reasons to become a digital pirate. Next, it provides an exploration of the consequences of digital piracy, using a base model and several extensions (with consumer sampling, network effects, and indirect appropriation). A closer look at market-structure implications of end-user piracy is then taken. After a brief review of commercial piracy, additional legal and private responses to end-user piracy are considered. Finally, a quick look at emerging new business models is taken.information good, piracy, copyright, IP protection, internet, peer-to-peer, software, music