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Enroll now, pay later: optimal pricing and nudge efforts for massive-online-open-courses providers

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  • Xiaoyan Chen

    (Southwest Jiaotong University)

  • Wei Geng

    (Southwest Jiaotong University
    Service Science and Innovation Key Laboratory of Sichuan Province)

Abstract

Massive online open courses (MOOCs) are emerging as a disruptive innovation in the e-learning industry. Despite its rapid growth, MOOCs are challenged on its financial sustainability. In this paper, we focus on freemium, the predominant business model of MOOCs, and observe the emerging practice of nudging the learners toward completion. In the analytical model, the MOOC provider maximizes its profit by setting the price of the verified track and the effect of nudging the learners, and the learner decides to either enroll in the audit track or purchase to upgrade to the verified track based on the standalone utility from learning, the utility from peers and the prospective cost relating to dropout. We solve the joint optimization problem for the MOOC provider and perform sensitivity analysis. This paper contributes to theories of exploring the business side of MOOCs and implementing the freemium model in the context of MOOCs.

Suggested Citation

  • Xiaoyan Chen & Wei Geng, 2022. "Enroll now, pay later: optimal pricing and nudge efforts for massive-online-open-courses providers," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 1003-1018, June.
    • Handle: RePEc:spr:elmark:v:32:y:2022:i:2:d:10.1007_s12525-021-00470-7
    DOI: 10.1007/s12525-021-00470-7
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    References listed on IDEAS

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    1. Rainer Alt, 2022. "Electronic Markets on platform transformation," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 401-409, June.

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    More about this item

    Keywords

    Massive online open courses; Freemium; Nudge; Completion rate;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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