Competitive pricing strategies in social networks

• 成果类型: Article
• 署名作者: Chen, Ying-Ju; Zenou, Yves; Zhou, Junjie
• 署名单位: Hong Kong University of Science & Technology; Monash University; National University of Singapore
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12249
• 发表日期: 2018
• 页码: 672-705
• 关键词: externalities; diffusion; MARKETS; TRADE

摘要

We study pricing strategies of competing firms selling heterogeneous products to consumers. Goods are substitutes and there are network externalities between neighboring consumers. In equilibrium, firms price discriminate based on the network positions and charge lower prices to more central consumers. We also show that, under some conditions, firms' equilibrium profits decrease when either the network becomes denser or network effects increase. In contrast, consumers always benefit from being more connected to each other. We determine the optimal network structure and compare uniform pricing and discriminatory pricing from the perspectives of firms and consumers.