Bundling Information goods of decreasing value

Bundling Information goods of decreasing value

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Article ID: iaor20073480
Country: United States
Volume: 51
Issue: 4
Start Page Number: 662
End Page Number: 667
Publication Date: Apr 2005
Journal: Management Science
Authors: , ,
Keywords: e-commerce
Abstract:

Consumers' average value for information goods, websites, weather forecasts, music, and news declines with the number consumed. This paper provides simple guidelines to optimal bundling marketing strategies in this case. If consumers' values do not decrease too quickly, we show that bundling is approximately optimal. If consumers' values to subsequent goods decrease quickly, we show by example that one should expect bundling to be suboptimal.

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