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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27799
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| Title: | Nonlinear pricing and type-dependent network effects |
| Authors: | Sundararajan, Arun |
| Issue Date: | Oct-2003 |
| Publisher: | Economic Letters |
| Citation: | Economics Letters 83 (1), 107-113 |
| Series/Report no.: | CeDER-PP-2004-04 |
| Abstract: | This paper analyzes optimal monopoly pricing under incomplete
information for a good that displays positive network effects. In
contrast with standard models of network effects (Katz and Shapiro,
1985), the good modeled in this paper is consumed in variable quantities
by heterogeneous customers, and the magnitude of the network effects
therefore depends on the total quantity consumed across customers,
rather than the total number of adopters. In addition, the value each
customer gets on account of the network effects depends on the
customer’s individual consumption, as well as the customer’s
type. Examples of products that fit this description at least partially
include corporate desktop software (where customers are corporations of
varying sizes, with varying intensity of software usage across
employees) and online trading services (such as those offered by eBay,
where network effects increase with increased trading volume). |
| URI: | http://hdl.handle.net/2451/27799 |
| Appears in Collections: | CeDER Published Papers
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