Free Mode And Pricing Strategy For Information Goods Under “Internet+” Economic Formation

In the development of “Internet +” economic formation in China and around the world,information consumption has resulted in a new form of consumption and new economic growth.The emergence of new products,new services and new formats in the information field has brought great opportunities to the information industry and also complicated the management and decision-making of information products and services.This thesis studies the free mode design and pricing strategy for information goods by applying the theories and methods of management science,industrial economics,marketing science and system science.The main research content and contributions include the following aspects.(1)We examine the impact of free offering on the competition in the presence of network effects when the market is fully covered and not covered.The firms can either offer a free core product and a paid service or offer them as a bundle.The core product has stand-alone value and can be used separately but the value-added service has no value without the core product.We derive the market equilibria and present conditions under which the freemium strategy outperforms the bundling strategy.(2)We model a new firm’s entry into an existing market under free strategy.Consumers can use the new product’s basic functionality for free and pay a subscription fee for accessing the addons.We anlyaze the competition between the incumbent and entrant firms when the entrant’s product infringes on the market in one of the two ways: high-end encroachment and low-end encroachment.(3)We incorporate consumer heterogeneous cost sensitivity into the game-theoretic model of a duopoly with sequential entry.We investigate the market equilibrium in price-setting strategies and characterize the conditions under which one provider acts as leader and the other acts as follower and under which the providers adopt simultaneous-move strategy.(4)We construct a game theoretical model involving two software vendors—one selling on-premises products at a one-time licensing fee and the other providing cloud services on a pay-per-use basis—and consumers that are heterogeneous in use frequency,in an environment where negative network security externalities are present.We study the competitive implications of security risk and software customization capability on consumer purchase choice and software vendors’ pricing and investment strategies.