Influence of strategic consumers on the network goods market

2021 ◽  
Vol 57 (4) ◽  
pp. 5
Author(s):  
Nikolai Svetlov
Keyword(s):  
Dynamic Pricing ◽  
Network Effect ◽  
Commodity Market ◽  
Strategic Consumers ◽  
Integral Effect ◽  
Goods Market ◽  
Price Growth ◽  
Modern Economic ◽  
Heterogeneous Consumers ◽  
Network Goods

One of the important trends in modern economic development is the expanding variety ofso-called network commodities. Network commodity is such a good the usefulness of which for each consumer depends on the total number of using it consumers. The purpose of the paper is to study dynamic pricing in the network commodity market with a positive network effect in the presence of two types of consumers: myopic, taking into account only the current utility of the commodity, and strategic, focused on utility for the entire period of use of the commodity. Market dynamics, including price trajectories maximizing the monopolist supplier's revenues, are established by running numerical experiments on the corresponding theoretical model. The features of this dynamics are revealed for the cases of a large share of myopic consumers and under the conditions of dominance of strategic consumers. It is demonstrated that, in contrast to the situation in the market of ordinary commodities, a monopoly supplier of the network commodity may be interested in the presence of strategic consumers in the market. The more such consumers are present, the shorter the period of warming up the market by the supplier by means of low prices and the higher the rate of the consequent price growth. Strategic consumers find themselves hostage of their own focus on the integral effect in consumption. The directions of further research of the market of network commodities with the heterogeneous consumers are presented.

scholarly journals THE DEFENSE OF PRICE DISCRIMINATION IN NETWORK AND INFORMATION GOODS MARKETS

2021 ◽  
Vol 24 (4) ◽  
pp. 39-55
Author(s):  
Ivan Soukal
Keyword(s):  
Price Discrimination ◽  
Dynamic Pricing ◽  
Marginal Cost ◽  
Market Failure ◽  
Economies Of Scale ◽  
Electric Energy ◽  
Information Goods ◽  
Cell Carrier ◽  
Goods Market ◽  
Network Goods

It is not uncommon that articles focused on consumer-price interaction in the network and information goods market swiftly condemn price discrimination as an obfuscation, on-purpose price complexity, or market failure. The reason is a general neoclassical rule of an efficient market where prices are set at marginal cost with no price discrimination. However, the matter is more complicated. This review provides authors an overview of why, where, and which type of price discrimination should be viewed by different optics. Goods such as software, cell carrier services, electronic newspapers subscription, electric energy supply, payment accounts, books, copyrighted content streaming, etc, cannot be treated like manufactured goods. The reasons are specific conditions – substantial and/or repeated fixed/sunk cost, economies of scale, and demand heterogeneity. Recognized economist W. J. Baumol described marginal cost set prices under these conditions as an ‘economic suicide’. Reviewed articles showed that firms are forced to adopt price discrimination in order to recover their costs and to serve more consumer segments. Reviewed authors provided facts to support the use of multipart tariffs, dynamic pricing, versioning, bundling, and Ramsey pricing. These conclusions are used for suggestions on how several studies of information and network goods should be modified. Modifications are related mostly to model assumptions and pricing conclusions. I argue that, in the case of information and network goods, there is justified price discrimination. Hence, there is a certain justified level of price complexity that has to be accepted and not taken as automated evidence of inefficiency, market power, and consumer exploitation.

scholarly journals Dynamic pricing of network goods in duopoly markets with boundedly rational consumers

2017 ◽  
Vol 13 (1) ◽  
pp. 429-447
Author(s):  
Haiying Liu ◽  
◽  
Xinxing Luo ◽  
Wenjie Bi ◽  
Yueming Man ◽  
...  
Keyword(s):  
Dynamic Pricing ◽  
Network Goods ◽  
Duopoly Markets

Object Design in Virtual Immersive Environments

2011 ◽  
pp. 348-365
Author(s):  
Jan Baum
Keyword(s):  
Design Tool ◽  
Virtual Learning Environment ◽  
Digital Design ◽  
Network Effect ◽  
Immersive Environments ◽  
Emergent Technologies ◽  
Design Program ◽  
Goods Market ◽  
Virtual Presence ◽  
Studio Practice

The ubiquity of digital technology and the pervasiveness of the Web have led to a paradigm shift in life and work. Never before have so many tools for communication, contribution, and collaboration been so globally interconnected. The Object Design program at Towson University engages the network effect of emergent technologies developing pedagogy to keep pace with global developments. Students learn 21st century skills as they engage virtual immersive environments as a digital design tool, for iterative prototyping, as a virtual presence augmenting traditional studio practice, to engage new economic platforms, and as a virtual learning environment for global dialogue and collaboration. Steady growth in virtual immersive environments support a burgeoning virtual goods market and further exploration for learning, training, and innovation across social sectors: enterprise, education, and government in the evolution of society.

scholarly journals Dynamic Pricing Based on Strategic Consumers and Substitutes in a Duopoly Setting

2014 ◽  
Vol 2014 ◽  
pp. 1-9
Author(s):  
Gongbing Bi ◽  
Lechi Li ◽  
Feng Yang ◽  
Liang Liang
Keyword(s):  
Decision Making ◽  
Nash Equilibrium ◽  
Product Differentiation ◽  
Dynamic Pricing ◽  
Dynamic Game ◽  
Solution Concept ◽  
Expected Value ◽  
Decision Making Process ◽  
Pricing Model ◽  
Strategic Consumers

Based on the rational strategic consumers, we construct a dynamic game to build a two-period dynamic pricing model for two brands of substitutes which are sold by duopoly. The solution concept of the dynamic game is Nash equilibrium. In our model, consumers have been clearly segmented into several consumption classes, according to their expected value of the products. The two competing firms enter a pricing game and finally reach the state of Nash equilibrium. In addition, decision-making process with only myopic consumers existing in the market is analyzed. To make the paper more practical and realistic, the condition, in which the myopic and strategic consumers both exist in the market, is also considered and studied. In order to help the readers understand better and make it intuitively more clearly, a numerical example is given to describe the influence of the main parameters to the optimal prices. The result indicates that, to maintain the firms’ respective optimal profits, the prices of the products should be adjusted appropriately with the changes of product differentiation coefficient.

The Reference Effects on a Retailer’s Dynamic Pricing and Inventory Strategies with Strategic Consumers

2015 ◽  
Vol 63 (6) ◽  
pp. 1320-1335 ◽  
Author(s):  
Shining Wu ◽  
Qian Liu ◽  
Rachel Q. Zhang
Keyword(s):  
Dynamic Pricing ◽  
Strategic Consumers

Dynamic Pricing in the Presence of Myopic and Strategic Consumers: Theory and Experiment

2016 ◽  
Vol 26 (1) ◽  
pp. 116-133 ◽  
Author(s):  
Mirko Kremer ◽  
Benny Mantin ◽  
Anton Ovchinnikov
Keyword(s):  
Dynamic Pricing ◽  
Strategic Consumers ◽  
Theory And Experiment

scholarly journals Dynamic Pricing in the Presence of Social Learning and Strategic Consumers

2017 ◽  
Vol 63 (4) ◽  
pp. 919-939 ◽  
Author(s):  
Yiangos Papanastasiou ◽  
Nicos Savva
Keyword(s):  
Social Learning ◽  
Dynamic Pricing ◽  
Strategic Consumers

scholarly journals Dynamic Pricing of Network Goods with Boundedly Rational Consumers

2006 ◽  
Author(s):  
Roy Radner ◽  
Arun Sundararajan ◽  
Ami Radunskaya
Keyword(s):  
Dynamic Pricing ◽  
Network Goods

scholarly journals Dynamic Pricing under Cost Reduction in the Presence of Myopic and Strategic Consumers

2019 ◽  
Vol 2019 ◽  
pp. 1-15
Author(s):  
Guangning Liu ◽  
Zhenzhong Guan ◽  
Hua Wang
Keyword(s):  
Dynamic Pricing ◽  
Cost Reduction ◽  
Pricing Strategy ◽  
Future Price ◽  
Purchase Decisions ◽  
Pricing Strategies ◽  
Strategic Consumers ◽  
Technology Advancement ◽  
Significant Cost Reduction ◽  
Strategic Waiting

After release, a product usually suffers cost reductions during its whole lifespan. Compared to the myopic, strategic consumers may have stronger incentive to delay the purchase once they perceive that a significant cost reduction will result in a markdown. The strategic (compared to the myopic) properties influence the seller both quantitatively in terms of proportion of strategic consumers and qualitatively in terms of customer patience. To forecast the reaction of the whole market under cost reduction, it is necessary to acquire the strategic properties. In this paper, we study the impacts of proportion of strategic consumers, customer patience, and cost reduction on dynamic pricing strategy when cost reduction comes from technology advancement. The seller makes pricing strategies when facing unknown future cost, and the buyer makes purchase decisions when facing unknown future price. Our study shows that generally both higher strategic consumer proportion and customer patience contribute to a delay in sales. Further, profit diversion happens under great combination of strategic properties. In addition, with the increase of customer patience, not only strategic but also myopic consumers will buy less. Finally, the strategic properties moderate the pricing strategy in latter stage when there is a cost reduction. This indicates a threshold as combination of strategic properties, upon which seller tends to offer a smaller markdown to discourage strategic waiting, and under which seller tends to offer a greater markdown to divert strategic consumers to the latter period.

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