Long-Term Competition for Product Awareness with Learning from Friends

Qiang Gong, Yujing Xu () and Huanxing Yang
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Qiang Gong: Zhongnan University of Economics and Law [China]
Yujing Xu: Shenzhen University [Shenzhen]
Huanxing Yang: OSU - The Ohio State University [Columbus]

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Abstract: We study a dynamic model of price competition with differentiated products in which new generations of consumers acquire information about available products from their friends of previous generations. The social network, which links consumers across generations, affects the evolution of consumers' awareness of products and firms' long-term (steady-state) market shares. Focusing on steady-state equilibria, we examine how the structure of the social network—including connectivity and homophily—influences market shares, pricing, and welfare.

Keywords: Learning from friends; Social network; Price competition; Market Shares; Differentiated products (search for similar items in EconPapers)
Date: 2024-05-27
New Economics Papers: this item is included in nep-com, nep-mic and nep-net
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Published in RAND Journal of Economics, 2024, 55 (2), pp.324-355

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