Bundling Information Goods: The Case of E-Journals
With the development of the Internet, e-business has become popular. Increasingly, e-journals are being sold via the Internet. E- journals have two main characteristics: one is the low marginal cost associated with access; the other is the large number of items. For the commercially motivated seller...
Saved in:
| Main Author: | |
|---|---|
| Format: | text |
| Language: | English |
| Published: |
Institutional Knowledge at Singapore Management University
2007
|
| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/etd_coll/8 https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1007&context=etd_coll |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Institution: | Singapore Management University |
| Language: | English |
| Summary: | With the development of the Internet, e-business has become popular. Increasingly, e-journals are being sold via the Internet. E- journals have two main characteristics: one is the low marginal cost associated with access; the other is the large number of items. For the commercially motivated seller, the issue of bundling a large number of low marginal cost items so as to maximize profits needs to be dealt with. In this thesis, a solution by way of an intermediate bundle is proposed. It is found that the profit obtained under the proposed procedure is 4% to 5% higher than that under the Chuang-Sirbu procedure, which is currently adopted by many sellers. Furthermore, when the number of products involved is not extremely large, the proposed procedure yields a profit level that is closer to the first price discrimination profit level than the Armstrong two-part tariff procedure. In this thesis, a heuristic rule to facilitate the determination of the optimal intermediate bundle size is also proposed. This is designed to avoid the lengthy simulation procedure that will be needed otherwise. |
|---|