Abstract/Details

Optimal and equilibrium pricing metrics for digital goods


2007 2007

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Abstract (summary)

Flooded by a large number of variables found by modern business intelligence applications, pricing managers are perplexed by the task of selecting variables for price discrimination. However, relevant literature remains scarce. This dissertation attempts to investigate how sellers should determine the optimal or equilibrium combination of pricing metrics in a monopoly or duopoly industry. In the second chapter, I develop a model that closely resembles linear regression and probit regression to solve the pricing metrics selection problem. The criterion found is similar to the selection of independent variables for linear regression; it is revenue-maximizing to select the variable that best reduces the residual variance of buyer's willingness-to-pay. In the third chapter, I investigate the metrics selection problem by a general linear duopoly demand system. This model suggests that the value of information embedded in pricing metrics depends on two factors: (1) The explanatory power of product demands: equivalently, metrics that best reduce residual variance of demands are good candidates. (2) The price and demand coefficients: specifically, this study shows that when these two products are substitutes and the pricing metric affects two demand curves in the sauce direction (different directions), duopoly sellers should adopt that pricing metric simultaneously (unilaterally) in the equilibrium. When two products are complements, these effects are reversed. In the last chapter, a two-product monopoly model is examined in a setup that matches the second paper. The optimal metrics selection is qualitatively similar to the equilibrium metrics selection in the second paper. This model shows that it is more profitable for the centralized monopoly to use pricing metrics than decentralized duopoly.

Indexing (details)


Subject
Marketing;
Management;
Business costs;
Competitive intelligence;
Prices;
Regression analysis;
Models;
Monopolies;
Duopoly;
Demand curves;
Studies
Classification
0338: Marketing
0454: Management
0505: Business costs
Identifier / keyword
Social sciences; Digital goods; E-commerce; Equilibrium pricing; Game theory; Optimal pricing; Price discrimination
Title
Optimal and equilibrium pricing metrics for digital goods
Author
Huang, Ke-Wei
Number of pages
110
Publication year
2007
Degree date
2007
School code
0868
Source
DAI-A 68/08, Dissertation Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
ISBN
9780549211723
Advisor
Radner, Roy
University/institution
New York University, Graduate School of Business Administration
University location
United States -- New York
Degree
Ph.D.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
3282260
ProQuest document ID
304738519
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/304738519
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