Group for Research in Decision Analysis

G-2014-35

Which Business Model for ebook Pricing?

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We characterize equilibrium pricing strategies in a marketing channel in two scenarios. In the first scenario, the manufacturer chooses the wholesale prices and the retailer the retail prices of the two versions of a product, i.e., tangible and digital. In the second scenario, the players use a revenue-sharing contract for only the digital version, while the competing version is managed by a wholesale price contract. The problem is inspired from a pricing controversy in the ebook industry.

, 10 pages