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Versioning in the Information Economy: Theory and Applications

Author

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  • Paul Belleflamme

Abstract

Price discrimination consists in selling the same product to different buyers at different prices. When sellers cannot relate a buyer's willingness to pay to some observable characteristics, price discrimination can be achieved by targeting a specific package (i.e., a selling contract that includes various clauses in addition to price) for each class of buyers. The seller faces then the problem of designing the menu of packages in such a way that each consumer indeed chooses the package targeted for her. This practice, known as versioning (or as second-degree price discrimination), is widespread in the information economy. In this paper, we propose a simple unified framework to study the general theory behind versioning and to consider a number of specific versioning strategies used in the information economy (namely, bundling, functional degradation and conditioning prices on purchase history). (JEL L82, L86, K11, O34)

Suggested Citation

  • Paul Belleflamme, 2005. "Versioning in the Information Economy: Theory and Applications," CESifo Economic Studies, CESifo Group, vol. 51(2-3), pages 329-358.
    • Handle: RePEc:oup:cesifo:v:51:y:2005:i:2-3:p:329-358.
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    File URL: http://hdl.handle.net/10.1093/cesifo/51.2-3.329
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    Cited by:

    1. Боровкова А.Е., 2019. "Поведение Фирмы-Посредника На Двустороннем Рынке При Дифференциации Продукта В Условиях Асимметрии Информации," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 55(2), pages 104-117, апрель.
    2. Comino, Stefano & Manenti, Fabio M., 2011. "Dual licensing in open source software markets," Information Economics and Policy, Elsevier, vol. 23(3), pages 234-242.
    3. Francisco Martínez-Sánchez, 2016. "Versioning Goods and Joint Purchase: Substitution and Complementarity Strategies," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(5), pages 577-590.
    4. Javier López-Cuñat & Francisco Martínez-Sánchez, 2015. "Anti-piracy policy and quality differential in markets for information goods," European Journal of Law and Economics, Springer, vol. 39(2), pages 375-401, April.
    5. Antoine Dubus & Christine Halmenschlager & Patrick Waelbroeck, 2024. "Fighting Free with Free: Freemium vs. Piracy," Working Papers hal-03991858, HAL.

    More about this item

    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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