Optimal pricing non-homogeneous market with network externalities
by Tchai Tavor; Uriel Spiegel
International Journal of Sustainable Economy (IJSE), Vol. 5, No. 4, 2013

Abstract: The paper analyses the options open to monopoly firms that sell software or internet service. We consider customers who have different reservation prices that are rectangularly distributed. The monopoly in general undertakes sustainable price discrimination between customers by producing two versions of the product, basic and advanced, where a zero price is charged for the lower quality product (i.e., the free version). The monopoly may also sell advertising space to increase revenues but may lose those customers that are annoyed by being exposed to compulsory advertising. We analyse the situation where the monopoly has an incentive to increase consistently its output due to the network externality and allow sustained free of charge basic service.

Online publication date: Mon, 31-Mar-2014

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Sustainable Economy (IJSE):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?


Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com