Price dynamics of vertically differentiated information markets

Abstract

We explore the price dynamics of a vertically differentiatedmarket in which two or more sellers compete to provide aninformation good or service to a population of buyers. Eachseller offers the good or service at a fixed level of "quality",and attempts to set its price in such a way that it maximizesits own profit. Five different seller pricing strategies,ranging widely from ones that require perfect knowledge andunlimited computational power to ones that require very littleknowledge or ...