Prasanna B Tambe Dec 3 2013 9 33 PM EST Hi all let me know if you have questions Megha Jain Dec 3 2013 9 35 PM EST hi professor i was wondering if there was any particular method logic for determining a right pricing strategy to choose for a product or if it just varies on reason Isabel Marie C Francisco Dec 3 2013 9 35 PM EST Hi Professor I have 2 quick questions Prasanna B Tambe Dec 3 2013 9 36 PM EST Megha do you mean for versioning vs group pricing etc Isabel Marie C Francisco Dec 3 2013 9 36 PM EST 1 Can you clarify how privacy could be beneficial to a firm i e through network effects Megha Jain Dec 3 2013 9 36 PM EST Yes Isabel Marie C Francisco Dec 3 2013 9 37 PM EST 2 What is the difference between more nodes and more partners as sources of network effects Prasanna B Tambe Dec 3 2013 9 37 PM EST Megha then the answer is just whichever makes the most money the company s goal is always to maximize profit given the information they have Prasanna B Tambe Dec 3 2013 9 37 PM EST Isabel can you give me the context for your first question about the benefits of privacy Megha Jain Dec 3 2013 9 39 PM EST Ok thanks Also another quick question How do network effects play into the concepts of openness vs control Andre C Ross Dec 3 2013 9 39 PM EST I think she meant piracy Jimmy K Chan Dec 3 2013 9 39 PM EST Hi professor in the bundling practice problem what would be the optimal price if a product 1 2 are sold seperately b they are bundled together Prasanna B Tambe Dec 3 2013 9 39 PM EST More nodes vs more partners is just context In social networks it makes sense to think of partners but other contexts like peer to peer sharing nodes make sense Prasanna B Tambe Dec 3 2013 9 39 PM EST Oh that makes sense thanks Andre Reem D souza Dec 3 2013 9 41 PM EST Hello professor could you explain a little more about trading volume as a source of network effects Isabel Marie C Francisco Dec 3 2013 9 41 PM EST On the sample exam one of the questions was about piracy and how it could benefit Microsoft through demand side economics I read the answer but it wasn t too clear to me Prasanna B Tambe Dec 3 2013 9 41 PM EST Piracy can be beneficial for network effects because piracy can increase the value of the product for people who actually pay money for the product especially if the pirates were not going to buy the product anyway Isabel Marie C Francisco Dec 3 2013 9 41 PM EST And yes my bad I meant piracy Kathy Y Zhao Dec 3 2013 9 41 PM EST Hi professor what is the difference between value from more nodes in a network and value from trading value Kathy Y Zhao Dec 3 2013 9 42 PM EST volume Prasanna B Tambe Dec 3 2013 9 42 PM EST Megha when network effects are open there are different benefits to exercising openness vs control Openness lets you grow the network faster but control means consumers face higher switching costs when they leave your network Timothy G Wu Dec 3 2013 9 43 PM EST Hi Professor on the slide Network Markets Compatibility Matters with the graph what s the answer to what s the network size of B at time t Is this different from the value of the network and the total value of product B Prasanna B Tambe Dec 3 2013 9 44 PM EST Jimmy if they are not bundled I believe sold for 25 and 20 netting 65 but as a bundle sold for 30 netting 60 I am not sure about that but this is what I recall Prasanna B Tambe Dec 3 2013 9 45 PM EST Reem if you have competing exchanges for any good used items or financial securities if all buyers and sellers gravitate towards a single exchange then it is hard for the other exchange to attract anyone because there are no buyers and sellers no liquidity etc Jimmy K Chan Dec 3 2013 9 46 PM EST Oh here are the numbers Alice values product 1 up to 60 and product 2 up to 40 Bob values product 1 up to 40 and product 2 up to 60 Prasanna B Tambe Dec 3 2013 9 46 PM EST Isabel does it make sense now or do you need more clarification Kathy Y Zhao Dec 3 2013 9 46 PM EST Hi Professor just have a another quick question for the Microsoft piracy question from the sample final can we say that it provides value for Microsoft because pirated versions are usually lower quality and Microsoft can emphasize the higher quality components of the non pirated versions and thus charge a higher price Kathy Y Zhao Dec 3 2013 9 46 PM EST Hi Professor just have a another quick question for the Microsoft piracy question from the sample final can we say that it provides value for Microsoft because pirated versions are usually lower quality and Microsoft can emphasize the higher quality components of the non pirated versions and thus charge a higher price Alexandra M Knights Dec 3 2013 9 47 PM EST Hi Professor I was going over the outline of key concepts you gave us and I had a couple questions 1 Can you explain direct indirect Network Effects and why they are important in digital industries Are direct network effects resulting from supply side economies and indirect from demand side economies of scale 2 What is the connection between Network Effects and Switching Costs 3 Will we be required to know details like managing lock in from seller and consumer perspective and will we have to use the model V a y Zt Prasanna B Tambe Dec 3 2013 9 47 PM EST Jimmy for that one it is 40 for each of the single products and 100 for the bundles Jimmy K Chan Dec 3 2013 9 47 PM EST Thanks Dennis Jiang Dec 3 2013 9 47 PM EST Hi professor why is there a need to discount high end products by the amount of surplus received from lower end prices Isabel Marie C Francisco Dec 3 2013 9 48 PM EST Yes makes sense Thank you Reem D souza Dec 3 2013 9 48 PM EST thanks Prasanna B Tambe Dec 3 2013 9 48 PM EST Kathy value from nodes and value from trading volume are similar but only differ in context e g one makes sense in the financial exchange sense one in the peer to peer networks sense etc Prasanna B Tambe Dec 3 2013 9 49 PM EST Tim yes the network size is just t then the network value is ct and the total value is b ct Timothy G Wu Dec 3 2013 9 …