Product pricing considering the consumer preference based on Internet of Things

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Abstract

With the rapid development of information technology, Internet of things is rapidly penetrated into the manufacturing industry, some manufacturers began to adopt the Internet of things technology to produce intelligent products. Focusing on the pricing of products in the home market under the Internet of things technology environment, the network effect and technological innovation are introduced in the condition that consumers’ preferences are evenly distributed and a pricing game model which can reflect the relationship among manufacturers are constructed. On this basis, the optimal subsidy rate of government is designed based on the principle of social welfare maximization. The results show that, with the advantage of low price of ordinary products, the manufacturer 1 (the ordinary household product manufacturer) can also obtain the corresponding market share. The network effect and the degree of product innovation are the important influencing factors for the manufacturer 2 (the intelligent household product manufacturer) to gain the competitive advantage. Increasing the subsidy rate can effectively stimulate the manufacturer 2 to carry out technological innovation, but it will lead to the decline of the total social welfare level.

Keywords

Internet of things Product pricing Network effect Game model 

Notes

Acknowledgements

This work was financially supported by Humanities and Social Science Project of Hebei education department (No. ZD201721).

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© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Economics and ManagementTangshan UniversityTangshanChina
  2. 2.School of Businesses AdministrationZhengzhou University of AeronauticsZhengzhouChina

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