Network Effects on Standard Software Markets: A Simulation Model to examine Pricing Strategies

Peter Buxmann, Freiberg University of Technology, Chair of Information Management

1/01/2005
(Original Publish Date: 2001)

This paper examines strategies of standard software vendors, in view of the existence of network effects on standard software markets. In particular, we analyze if and under which conditions penetration pricing can be considered as a promising strategy. Our work is based on a simulation model, which provides the opportunity to examine the impact of alternative pricing strategies on the distribution of software systems. Furthermore, the paper provides some empirical results from the perspective of the users.