Home  Journals  Financial Analytics: Science and Experience  30(312) - 2016 August

A dynamic pricing model in the network goods market in terms of a monopoly supplier

Vol. 9, Iss. 30, AUGUST 2016

Article PDF Version

Received: 29 June 2016

Received in revised form: 15 July 2016

Accepted: 27 July 2016

Available online: 16 August 2016

Subject Heading: MATHEMATICAL ANALYSIS AND MODELING IN ECONOMICS

JEL Classification: C12, D46, G30

Pages: 2-18

Subject The article studies the processes of pricing in network benefits markets.
Objectives The paper aims to develop mathematical tools to describe and evaluate the various pricing strategies of the company in the market of network benefits.
Methods For the study, we used a combination of the methodology of neoclassical theory, investment analysis and mathematical modeling.
Results We present a model of dynamic pricing in network benefits markets in terms of a monopoly provider and comparative characteristics of different pricing strategies.
Conclusions and Relevance The proposed model provides an opportunity to assess the various pricing strategies in the market of network benefits. The computer-based experiment results suggest that two significant quality indicators of the investment project in development, manufacturing and after-sales service of network benefits, i.e. Net Present Value (NPV) and Discounted Payback Period (DPB) behave differently. NPV maximization is achieved when using the subscription fee; reduced DPB makes a choice in favor of the purchase and service fees combination.

Keywords: pricing, network goods, external effects, project development, investment

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