Abstract
Intense competition in the information good market force vendors to continuously improve features and pricing strategies. We examine a two-stage model involving an original vendor and a new vendor under the influence of product bundling and customer churn. The original vendor offers on-premise software and an improved version in the second stage, while the new vendor enters with an advanced information good utilizing cloud-based software. The existence of product bundling could enhance profits and foster a collaborative environment, culminating in a mutually beneficial outcome.
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