With the development of the Internet, e-business has become popular. Increasingly, e-journals are being sold via the Internet. E-Journals have two main characteristics: one is the low marginal cost associated with access; the other is the large number of items. For the commercially motivated seller, the issue of bundling a large number of low marginal cost items so as to maximize profits needs to be dealt with. In this thesis, a solution by way of an intermediate bundle is proposed. It is found that the profit obtained under the proposed procedure is 4% to 5% higher than that under the Chuang-Sirbu procedure, which is currently adopted by many sellers. Furthermore, when the number of products involved is not extremely large, the proposed procedure yields a profit level that is closer to the first price discrimination profit level than the Armstrong two-part tariff procedure. In this thesis, a heuristic rule to facilitate the determination of the optimal intermediate bundle size is also proposed. This is designed to avoid the lengthy simulation procedure that will be needed otherwise.
|School:||Singapore Management University (Singapore)|
|Department:||School of Economics|
|School Location:||Republic of Singapore|
|Source:||MAI 48/06M, Masters Abstracts International|
|Subjects:||Marketing, Economics, Web Studies, Mass communications|
|Keywords:||Aggregation, Bundling, Digital goods, Information goods, Pricing, Publishing industry|
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