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Pricing, Quality-Setting, and Order of Plays in an Online Information Market

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  • Sang-Ho Lee

    (Department of Economics, Chonnam National University, Korea)

Abstract

This paper considers the issue of quality differentiation in an online information market in which one network provider and two content providers compete over both prices and con-tent qualities for the real-time network delivery of digital information products. We examine the order of plays in games of vertical product differentiation and show that sequential price choice of network providers reduces content differentiation among online information prod-ucts, so that intense price competition among content providers results. However, sequential price competition reduces not only social welfare but also consumers' surplus.

Suggested Citation

  • Sang-Ho Lee, 2002. "Pricing, Quality-Setting, and Order of Plays in an Online Information Market," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(3), pages 179-191, December.
    • Handle: RePEc:ijb:journl:v:1:y:2002:i:3:p:179-191
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    References listed on IDEAS

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    More about this item

    Keywords

    sequential price competition; content differentiation; online information product;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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