Version strategy for information goods with a finite number of types

Abstract

This paper constructs an optimization model based on dynamic game theory, which focuses on the version strategy of information goods in the case that the Types of Consumers are Limited. In this model, utility function is the general type, and the consumers choose the version according to their incentive compatible constraint and participation constraint, while the manufacture makes decision according to maximum profit. This paper argues that the best version strategy for manufacture is the single version. Meanwhile, the price of the best single version and the specific calculation of manufacture's profit are also given in this paper. Based on the profit analysis, technology innovation is the only way to making profit in short term. In the long run, however, only improving the consumers' preference level and consumers' preference distribution can guarantee the sustainable development of information products.