Pricing web 2.0 related services: peer production

  • Authors:

  • Yung-Ming Li;Yi-Lin Lee

  • Affiliations:

  • National Chiao Tung University, Hsinchu, Taiwan Roc;National Chiao Tung University, Hsinchu, Taiwan Roc

  • Venue:
  • Proceedings of the ninth international conference on Electronic commerce
  • Year:
  • 2007

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Abstract

Peer production has played an important role in the economics of Web 2.0 related services. User participation and contribution become the main driving dynamics of this new economic paradigm, significantly different from traditional firm-based or market-based production. However, the quality of peer production based service is uncertain, and highly related to not only the level of individual contribution but also the network externality of these contributions. To address and resolve this issue, in this paper, we propose an analytical model based on the concepts of peer contribution and quality warranty to study the pricing strategy of the increasingly emerging Web 2.0 related services. Best quality strategy under monopolistic market is found in our research. And under duopolistic market, one of the providers may provide higher quality than he advertises is also an important finding. Several implications have been discussed to help clarify the progress of peer production, and hints for peer production service providers are also presented.