search query: @author Bhargava, H. K. / total: 2
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| Author: | Bhargava, H. K. Choudhary, V. |
| Title: | Information Goods and Vertical Differentiation |
| Journal: | Journal of Management Information Systems
2001 : FALL, VOL. 18:2, p. 89-106 |
| Index terms: | INFORMATION INFORMATION TECHNOLOGY QUALITY |
| Language: | eng |
| Abstract: | Second-degree price discrimination, that is, vertical differentiation, is widely practiced by firms selling physical goods to consumers with heterogeneous valuations. This strategy leads to market segmentation and has been shown to be optimal by many researchers. On the other hand, researchers have also demonstrated, under certain restrictive conditions, that vertical differentiation may not be optimal for information goods. The authors analyze vertical differentiation for a monopolist, continuing the practice of modeling consumer valuation as a linear function of product quality and consumer type but generalizing assumptions about marginal costs and consumer distributions. The authors show that the firm's optimal product line depends on the benefit-to-cost ratio of qualities in the choice vector. |
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