Fainmesser, I P and Galeotti, A (2020) Pricing network effects: competition. American Economic Journal: Microeconomics, 12 (3). pp. 1-32. ISSN 1945-7669
Abstract
We study the practice of in influencer marketing in oligopoly markets and its effect on market effciency. In our model, each consumer is influenced by choices of a subset of other consumers. Firms gather information on consumers influence and price discriminate using this information. In equilibrium, firms charge premia/subsidize below/above-average-influential consumers; the premia/discounts depend on the strength of network effects and on how much information firms have on consumers influence. Influencer marketing leads to inefficient consumer-product matches. Firms investments in information are strategic complements, leading to a race for information acquisition that erodes welfare and firms profits but increases consumer surplus.
More Details
Item Type: | Article |
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Subject Areas: | Economics |
Additional Information: |
© 2019 American Economic Association |
Date Deposited: | 01 Aug 2019 08:55 |
Date of first compliant deposit: | 10 Jul 2019 |
Subjects: |
Pricing Competition |
Last Modified: | 05 Nov 2024 03:11 |
URI: | https://lbsresearch.london.edu/id/eprint/1192 |