Post date: Sep 13, 2016 3:57:31 AM
Hemant K. Bhargava and Daewon Sun
European Journal of Operational Research 2008, Vol. 191, issue 3
Versioning through low and high quality levels is usually possible only when the firm can definitively deliver sufficiently higher quality in exchange for high price. But for many goods, especially real-time information products, the seller firm does not control all levers that affect quality of service. This paper proposes and demonstrates that even when quality-of-service (Qos) is uncertain, firms can price discriminate by offering multiple QoS guarantees, by designing these as statistical guarantees (of the form, quality level q at least k% of time).