Confessions of an Internet Monopolist: Demand Estimation for a Versioned Information Good
29 Pages Posted: 30 Aug 2005
Date Written: July 25, 2005
We investigate profit-maximizing versioning plans for an information goods monopolist. The analysis employs data obtained from a web-based field experiment in which potential buyers were offered information goods in varied price-quality configurations. Maximum simulated likelihood (MSL) methods are used to estimate parameters describing the distribution of utility function parameters across potential buyers of the good. The resulting estimates are used to examine the impact of versioning on seller profits and market efficiency.
Keywords: Versioning, price discrimination, field experiment, maximum simulated likelihood
JEL Classification: C81, C93, D12, D42, D83
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