Vertical Differentiation and Sequential Introduction for Versioned Information Products

This article considers three situations when versioned information products introduce sequentially, then compares vertical differences and pricing strategies. The result shows that three equilibriums exist in the different sales orders under the vertical product differentiation. Price of high-versioned product will be highest when firm provides high-versioned product first then low-versioned product. It is the best strategy for covering the market and maximizing profits. For providing low-versioned product first then high-versioned product, the price of high-versioned product and the total market demands are affected by the waiting cost threshold. In addition, increasing of network externality will cause the increasing of the profit, price and demand of high-versioned product, but the demand for low-versioned product will be reduced.