Varian (who is or was Google's chief economist) is also the author of a very good book, written in the late 1990s, that covers many of the same topics:

Shapiro, Carl and Varian, Hal. Information Rules: A Strategic to the Network Economy. Harvard Business School Press, 1998.

The book is a classic, and is actually at the top of the reading list in a current MIT course also called "The Economics of Information":

http://ebusiness.mit.edu/erik/567%202009%20syllabus-2009-11-...

There is a class blog here:

http://www.economicsofinformation.com/

PDF and html versions available from:

From http://people.ischool.berkeley.edu/~hal/people/hal/papers.ht...

Unfortunately, I get a 404 on that link (I use hnDroid, this may or may not be relevant).

Thank you.

Replace "ht..." with "html" in your mobile browser. It's a bug in that reader app.

EDIT: The bug is also in the Hacker News Reader android app.

His page at http://people.ischool.berkeley.edu/~hal/ says he's retired from Cal and now at Google.

I've bookmarked his page of academic papers. Unsurprisingly, since his getting affiliated with Google about 8 years ago, he's written on economics of Search: http://people.ischool.berkeley.edu/~hal/people/hal/papers.ht... and on the Google Library Project.

Sure wish he (or someone) would be funded to do an update of this (2000 pub date) study. I wonder what additional variables might need to be factored in by now.

This strikes me as odd (from section 5.4):

> "Acquisti and Varian [2001] examine a simple model with two types of consumers: high-value and low-value, in which a monopolist can commit to a price plan. They find that although a monopolistic seller is able to make offers conditional on previous purchase history, it is never profitable for it to do so, which is consistent with the earlier analysis of intertemporal price discrimination by Stokey [1979] and Salant [1989]."

Isn't this what OS companies do? They charge less for upgrades? According to this paper, this would "never be profitable".

Am I misunderstanding this?

EDIT: added section number for reference and context

The paper refers to whether a monopolist should set different prices to the two types of customers (high value or low). They find that the answer is no. The part that is confusing you (I think), is in the next paragraph, where the paper then finds that if the monopolist however offers an enhanced service based on purchasing history, it does become optimal to set two different prices. Also by "never profitable", they don't mean that the monopolist won't make any profit, it's just that they won't be able to increase profit.

Gotcha. I didn't realize he meant growth.

Thanks.

A lot of research has been done since; the most interesting has to be on “multi-sided platforms”. I'm working on including diffusion on complex network in there too.

I am actually teaching that class to Masters in CS & Management, and trying to have proper presentations ready in video format — but I spend too much time on HN for it to be ready yet.

Great find, thanks.