Optimal strategic pricing of reproducible consumer products

Fernando Nascimento, Wilfried R. Vanhonacker

    Research output: Contribution to journalArticlepeer-review


    This paper investigates the strategic pricing of consumer durable products which can be acquired through either purchase or reproduction (e.g., computer software). As copy piracy results in an opportunity loss, its adverse effect on profits needs to be incorporated in strategic decisions such as pricing. Using a dual diffusion model which parsimoniously describes sales and copying, and employing control theory methodology, optimal price trajectories are derived for the period of monopoly. The results indicate that (a) in absence of any protection, skimming pricing strategies are generally optimal, and (b) copy protection is warranted only when sales diffuse much faster than copying and the protection technology does not significantly raise the marginal production cost.
    Original languageEnglish
    Pages (from-to)921-937
    Number of pages17
    JournalManagement Science
    Issue number8
    Publication statusPublished - Aug 1988


    • Marketing
    • New products
    • Pricing


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