Information goods, such as journal articles, require substantial initial...

During the 1990s there were three back-to-back events that stimulated investment in information technology: telecommunications deregulation in 1996, the ``year 2K' ' problem in 1998-99, and the ``dot com' ' boom in 1999-2000. The resulting investment boom led to dramatic run-up of stock prices for information technology companies.

We introduce an information bundling model that addresses two important but relatively unstudied issues in real markets for information goods: automated customization of content based on categories, and competition among content providers. Using this model, we explore the strategies that sellers (or automated agents acting on their behalf) might use to set both price and bundle composition, and the market dynamics that might ensue from such strategy choices. The model incorporates different categories of information, explicitly accounts for finite production and consumption costs, and allows for possibly heterogeneous valuations by consumers. First, we determine the optimal bundle composition and price for a monopolist as a function of the seller's production costs and the consumers' preferences and consumption costs. For finite costs, finite-sized bundles are optimal. Then, we use game-theoretic analysis and simulation to explore the behavior of the market when there are multiple cont...

In this paper, we present a novel system for selling bundles of news items. Through the system, customers bargain with the seller over the price and quality of the delivered goods. The advantage of the developed system is that it allows for a high degree of flexibility in the price, quality, and content of the o#ered bundles. The price, quality, and content of the delivered goods may, for example, di#er based on daily dynamics and personal interest of customers.

We present a dynamical model of web site growth in order to explore the e ects of competition among web sites and to determine how they a ect the nature of markets. We show that under general conditions, as the competition between sites increases, the model exhibits a sudden transition from a regime in which many sites thrive simultaneously, to a "winner take all market " in which a few sites grab almost all the users, while most other sites go nearly extinct. This prediction is in agreement with recent measurements on the nature of electronic markets. SMM thanks the Fannie and John Hertz Foundation and the Stanford Graduate Fellowship for discussions. nancial support. We thank Eytan Adar and Lada Adamic for stimulating 1 1

The way online business is performed will be changed by application service providers (ASPs) and ASP marketplaces (MMM). A fundamental shift can be observed in Corporate Application Delivery: The enterprise applications market is transforming into a rental-based software model coupled with managed services [9]. ASP marketplaces provide alternatives to the classical business model of software which will have a significant impact on the software market [10]. Still, before this kind of ASP marketplaces will become commonplace, several critical research questions have to be answered. The main problem is economical, not technical: Application service providers and ASP marketplaces want to know how to set prices for different customer groups and how to offer digital goods in sizeable versions (product lines) which are fitting to the size of the company and the budget of the consumer. Our goal in this paper is to describe different business models for ASP marketplaces such as MMM....

This is a review of various economic phenomenon that are important in hightechnology industries, such as personalization of products and pricing, versioning, bundling, switching costs, lock-in, economics of scale, network effects, complements and computer-mediated contracts. Most of these forces tend to point towards higher

This paper examines strategies of standard software vendors, in view of the existence of network effects on standard software markets. In particular, we analyze if and under which conditions penetration pricing can be considered as a promising strategy. Our work is based on a simulation model, which provides the opportunity to examine the impact of alternative pricing strategies on the distribution of software systems. Furthermore, the paper provides some empirical results from the perspective of the users.

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What is the relationship between market structure and innovative behavior in commercial computing and Internet markets? This broad question does not and cannot have a simple answer for at least two reasons. First, the core determinants of this relationship did not remain constant over several decades. Second, commercial