Pricing Patterns of Cellular Phones and Phonecalls: a Segment-Level Analysis
Management Science
Product Customization and Price Competition on the Internet
Management Science
Economics of an Information Intermediary with Aggregation Benefits
Information Systems Research
"Let Me Talk to My Manager": Haggling in a Competitive Environment
Marketing Science
Nonlinear Pricing of Information Goods
Management Science
On the Optimality of Fixed-up-to Tariff for Telecommunications Service
Information Systems Research
The Market Structure for Internet Search Engines
Journal of Management Information Systems
Web Portals: Evidence and Analysis of Media Concentration
Journal of Management Information Systems
Information Goods and Vertical Differentiation
Journal of Management Information Systems
Research Note---When Is Versioning Optimal for Information Goods?
Management Science
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Information goods vendors offer different pricing schemes such as per user pricing and site licensing. Why do competing sellers adopt different pricing schemes for the same information good? Pricing schemes affect buyers' usage levels and thus the revenue generated from different segments of buyers. This can allow competing firms in a duopoly to differentiate themselves by offering different pricing schemes. Such strategic use of pricing schemes can allow undifferentiated sellers to earn substantial profits in a friction-free market for a commoditized information good. These conditions would otherwise lead to the Bertrand equilibrium and zero profits. We show that adopting asymmetric pricing schemes can be a Nash equilibrium for information goods with negligible marginal cost of production. We extend our model to the case of information goods that are horizontally differentiated and show that sellers will offer a single-pricing scheme that is different from competitors when the sellers are weakly differentiated. When the sellers are strongly differentiated, each seller will offer multiple pricing schemes. We show that it can be optimal for a seller to offer multiple pricing schemes---metered and flat fee pricing schemes, even in the absence of transactions costs.