Transformative value of the Internet of Things and pricing decisions

Xiong Zhang; Wei T. Yue

doi:10.1016/j.elerap.2019.100825

Author(s)

Xiong Zhang
Wei T. Yue

Related Research Unit(s)

Department of Information Systems

Detail(s)

Original language	English
Article number	100825
Journal / Publication	Electronic Commerce Research and Applications
Volume	34
Online published	6 Jan 2019
Publication status	Published - Mar 2019

Link(s)

DOI	DOI https://doi.org/10.1016/j.elerap.2019.100825 Final Published version
	Check@CityULib
Link to Scopus	https://www.scopus.com/record/display.uri?eid=2-s2.0-85060058381&origin=recordpage
Permanent Link	https://scholars.cityu.edu.hk/en/publications/publication(4229ed40-fe00-4358-b27d-b59463132965).html

Abstract

Firms increasingly target consumers with personalized products via the Internet of Things (IoT). This study investigates a firm’s decisions on IoT capability with three types of pricing policies: low price, high price, and contingent pricing. Although, intuitively, IoT capability may substitute contingent pricing in reducing demand uncertainty, this research proposes that the firm may achieve optimal profit by using contingent pricing together with IoT. Interestingly, IoT-induced product-valuation improvement will indirectly diminish the value provided by contingent pricing. The results provide insights into how firms can strategize pricing decisions along with appropriate IoT capability.