Information Disclosure and Pricing Policies for Sales of Network Goods

Abstract

Amazon and Apple, which sell tablet devices, have adopted different implicit information policies and developed distinct “reputations” about their tablets’ sales volume release. With Amazon, “even a number as basic, and presumably impressive, as how many Kindle e-readers the company sells is never released.” With Apple, iPhone and iPad sales numbers are always released, even if they are disappointing. In the paper “Information Disclosure and Pricing Policies for Sales of Network Goods,” the authors study the sales information release policy, disclosure versus nondisclosure, for selling network goods subject to market size uncertainty. They identify two countervailing effects, a prodisclosure “Matthew effect” and an antidisclosure saturation effect, that drive the firms’ sales information disclosure policies. In addition, the authors also study the situation where the firm can decide on an all-or-nothing information disclosure policy together with endogenized prices, including state-independent pricing, contingent preannounced pricing, and contingent pricing without commitment.