Designing the Optimal Extended Warranty Price with Indirect Network Effect

Abstract

In the situation of indirect network effect, this paper mainly studies the optimal extended warranty price. First, the characteristics of the extended warranty price are discussed. Next, the optimal extended warranty price model is advanced. From the model, the authors can draw that the influence factors mainly include the producer and consumers’ risk preferences, the incompatible degree of the producer’s maintenance technology, the extended warranty period, the producer and consumers’ per-occasion maintenance cost. Finally, the authors carry the simulation method to indicate their influence relation. The results have theoretical significance for the automobile producer to ensure the optimal extended warranty price.