Why do firms engage in versioning when the costs of production differ little for different versions of the product?
A) It is a form of price discrimination that allows the firm to earn more revenue and profit from its market situation.
B) It is a lock-in strategy that allows a firm to retain customers over time.
C) It tempts existing customers to buy multiple units of the product so that they can own every version.
D) The firm will appear to be more dominant in this market if it produces several versions of its products.

Question

Quizplus · Accepted Answer

Versioning is a strategy that enables firms to engage in price discrimination by offering different versions of a product at different price points, catering to different segments of the market. This allows the firm to capture more consumer surplus and increase its revenue and profit, even when the costs of producing these different versions are similar.

Why Do Firms Engage in Versioning When the Costs of Production