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Versioning Goods and Joint Purchase: Substitution and Complementarity Strategies

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  • Francisco Martinez

    () (Department of Economic Theory and Economic History, University of Granada.)

Abstract

We analyze the monopolist’s decision about how to design different versions of a good, i.e. whether to make them substitutes or complements, when consumers can buy them simultaneously. In this context, we find that versioning goods as substitutes or complements may be optimal for the monopolist, and the final result depends on the degree of concavity and convexity of the cost function.

Suggested Citation

  • Francisco Martinez, 2007. "Versioning Goods and Joint Purchase: Substitution and Complementarity Strategies," ThE Papers 07/06, Department of Economic Theory and Economic History of the University of Granada..
    • Handle: RePEc:gra:wpaper:07/06
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    References listed on IDEAS

    as
    1. Stephen W. Salant, 1989. "When is Inducing Self-Selection Suboptimal for a Monopolist?," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 391-397.
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    3. Xueqi (David) Wei & Barrie R. Nault, 2014. "Monopoly Versioning of Information Goods When Consumers Have Group Tastes," Production and Operations Management, Production and Operations Management Society, vol. 23(6), pages 1067-1081, June.
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    5. Yalç{i}n Akçay & Harihara Prasad Natarajan & Susan H. Xu, 2010. "Joint Dynamic Pricing of Multiple Perishable Products Under Consumer Choice," Management Science, INFORMS, vol. 56(8), pages 1345-1361, August.
    6. Paul Belleflamme, 2005. "Versioning in the Information Economy: Theory and Applications," CESifo Economic Studies, CESifo, vol. 51(2-3), pages 329-358.
    7. Jing, Bing, 2007. "Network externalities and market segmentation in a monopoly," Economics Letters, Elsevier, vol. 95(1), pages 7-13, April.
    8. Gabszewicz, Jean & Sonnac, Nathalie & Wauthy, Xavier, 2001. "On price competition with complementary goods," Economics Letters, Elsevier, vol. 70(3), pages 431-437, March.
    9. Jean J. Gabszewicz & Xavier Y. Wauthy, 2003. "The option of joint purchase in vertically differentiated markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(4), pages 817-829, November.
    10. Joan Calzada & Tommaso M. Valletti, 2012. "Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions," Marketing Science, INFORMS, vol. 31(4), pages 649-667, July.
    11. Raymond J. Deneckere & R. Preston McAfee, 1996. "Damaged Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(2), pages 149-174, June.
    12. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
    13. Hemant K. Bhargava & Vidyanand Choudhary, 2008. "Research Note--When Is Versioning Optimal for Information Goods?," Management Science, INFORMS, vol. 54(5), pages 1029-1035, May.
    14. Nancy L. Stokey, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 355-371.
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    More about this item

    Keywords

    Versioning Goods; Joint Purchase Option; Substitutes; Complementarity; Price Discrimination; Market Segmentation.;

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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