Optimal strategic pricing of reproducible consumer products

Fernando Nascimento, Wilfried R. Vanhonacker

    Resultado de pesquisarevisão de pares


    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.
    Idioma originalEnglish
    Páginas (de-até)921-937
    Número de páginas17
    RevistaManagement Science
    Número de emissão8
    Estado da publicaçãoPublicado - ago 1988

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