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Confessions of an Internet Monopolist: Demand Estimation for a Versioned Information Good

  • Chappell, Henry
  • Guimaraes, Paulo
  • Ozturk, Orgul

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.

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File URL: http://mpra.ub.uni-muenchen.de/10106/1/MPRA_paper_10106.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10106.

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Date of creation: 2006
Date of revision: 2008
Handle: RePEc:pra:mprapa:10106
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  1. Esteves, Rosa-Branca, 2010. "Pricing with customer recognition," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 669-681, November.
  2. V.A. Hajivassiliou & P. A. Ruud, 1993. "Classical Estimation Methods for LDV Models Using Simulation," Econometrics 9311002, EconWPA.
  3. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
  4. David Reiley & John List, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
  5. Carlos Arias & THOMAS L. COX, 1999. "Maximum Simulated Likelihood: A Brief Introduction for Practitioners," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 421, Wisconsin-Madison Agricultural and Applied Economics Department.
  6. Loginova, Oksana & Taylor, Curtis, 2003. "Price Experimentation with Strategic Buyers," Working Papers 03-02, Duke University, Department of Economics.
  7. Aghion, Philippe, et al, 1991. "Optimal Learning by Experimentation," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 621-54, July.
  8. Brian Kahin & Hal R. Varian (ed.), 2000. "Internet Publishing and Beyond: The Economics of Digital Information and Intellectual Property," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611597, June.
  9. Lee, Lung-Fei, 1995. "Asymptotic Bias in Simulated Maximum Likelihood Estimation of Discrete Choice Models," Econometric Theory, Cambridge University Press, vol. 11(03), pages 437-483, June.
  10. Aghion Philippe & Bolton, Patrick & Harris Christopher & Jullien Bruno, 1991. "Optimal learning by experimentation," CEPREMAP Working Papers (Couverture Orange) 9104, CEPREMAP.
  11. Rothschild, Michael, 1974. "A two-armed bandit theory of market pricing," Journal of Economic Theory, Elsevier, vol. 9(2), pages 185-202, October.
  12. Gourieroux, Christian & Monfort, Alain, 1993. "Simulation-based inference : A survey with special reference to panel data models," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 5-33, September.
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