Optimal Pricing For Information Goods And Complementary Service Of Retail Enterprises In Duopoly Market With Heterogeneous Consumers

With the rapid development of economic globalization and continuous improvement of science and technology, enterprises that providing information goods gradually expand retail distribution to gain more market share, and focus on the quality of complementary service. As homogeneous products are sold by these companies, they may distinguish from each other by providing different quality of complementary service. The optimal pricing strategy for information goods and complementary service has been the primary issue for providers of information goods in competitive market. Most of existing researches concentrate on pricing of only information goods without considering the subsequent service, or addressed the problem based on the assumption that the consumers have the same network effects.In this thesis, we analyze the optimal pricing strategy with heterogeneous consumers for duopoly companies providing information goods and complementary service. A game model with two types of strategies including bundle pricing and separate pricing are proposed to obtain optimal strategies for firms by analyzing four different equilibriums in order to maximize their profits. Meanwhile, a coefficient representing heterogeneous network effects strength is introduced into the Hotelling model which is used to derive the demand function and the profit function of companies, a two-stage Bertrand game is utilized to analyze the pricing competition. The analytical solutions for the duopoly's optimal pricing together with their profits are computed by solving the proposed model. Numerical simulation illustrates how the market size and the market structure affect prices of goods and services, market shares and total profits of two companies, and how duopoly companies choose their different pricing strategies at different combinations of costs and market sizes.From theory perspective, this thesis addresses the pricing analysis on information goods and complementary service for duopoly companies, which also extends the application of Hotelling model and enriches the research of pricing for information goods. Meanwhile, this thesis is practically valuable for selecting sales strategy and establishing the optimal price in duopoly companies.