We study firms that sell multiple substitutable products and customers whose purchase behavior follows a Nested Logit model, of which the Multinomial Logit model is a special case. Customers make purchasing decision sequentially under the Nested Logit model: they first select a nest of products...

Traditional one-price-for-all extended warranties do not differentiate customers according to their risk attitudes, usage rates or operating environment. These warranties are priced to cover the cost of high usage customers who experience more failures and are willing to pay a risk premium for...

Frequent technological innovations and price declines adversely affect sales of extended warranties as product replacement upon failure becomes an increasingly attractive alternative. To increase sales and profitability, we propose offering flexible-duration extended warranties. These warranties...

This paper investigates the threshold effects on the consideration set formation for consumers and the associated pricing decisions for firms. In the class of random utility maximization choice models, consumers choose the alternative with the largest utility after resolving utility...

In this paper, we develop an integrated framework to study a firm's joint decisions on product price, quality and service duration in a variety of monopolistic and competitive scenarios. Product price, quality, and ancillary service (such as maintenance and factory warranty) are arguably among...