Digital pricing with piracy and variety seeking

Yu Ning, Su Xiu Xu, Mian Yan, George Q. Huang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

12 Citations (Scopus)


This paper aims to explore behavioral digital pricing which incorporates realistic consumer behavior into firms' pricing and anti-piracy investment models. We consider a duopoly market with an original company and a pirated group selling digital products. The demand is sensitive to both parties' prices. We extend the traditional Hotelling model by taking into account the effects of externality on both parties. We then propose three types of price competition games: (I) Cournot model, (II) Stackelberg model with the original company as the leader, and (III) the Stackelberg model with the pirated group as the leader. In model II, if the value of externality effects is lower than a threshold, the original company will benefit from the government anti-piracy policy that tolerates some piracy. Finally, we investigate the behavior of consumer variety seeking in a two-period Cournot model. With the presence of variety seeking, both the original and pirated parties will adopt higher prices in the first period. Surprisingly, variety seeking brings higher profits to both parties in two periods.

Original languageEnglish
Pages (from-to)184-195
Number of pages12
JournalInternational Journal of Production Economics
Publication statusPublished - Dec 2018
Externally publishedYes


  • Digital pricing
  • Externality
  • Piracy
  • Protection investment
  • Variety seeking

ASJC Scopus subject areas

  • General Business,Management and Accounting
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


Dive into the research topics of 'Digital pricing with piracy and variety seeking'. Together they form a unique fingerprint.

Cite this