Social learning with differentiated products

Arthur Campbell

RAND Journal of Economics, 2019, vol. 50, issue 1, 226-248

Abstract: Learning from friends is a key process by which consumers acquire information about available products. This article embeds social learning in a model of firms producing differentiated products. I consider how the structure of social relationships between consumers influences pricing and welfare. In particular, how a variety of characteristics of social networks ‐ distribution of friendships, homophily, clustering, and correlations between an individual's preferences and number of friends ‐ influence these outcomes. I also find conditions under which consumer awareness and the sensitivity of demand to prices are useful measures of the informational efficiency of markets.

Date: 2019
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https://doi.org/10.1111/1756-2171.12268

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Persistent link: https://EconPapers.repec.org/RePEc:bla:randje:v:50:y:2019:i:1:p:226-248

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