A self-organized criticality participative pricing mechanism for selling zero-marginal cost products

Daniel Fraiman

Chaos, Solitons & Fractals, 2022, vol. 158, issue C

Abstract: In today's economy, selling a new zero-marginal cost product is a real challenge, as it is difficult to determine a product's “correct” sales price based on its profit and dissemination. As an example, think of the price of a new app or video game. New sales mechanisms for selling this type of product need to be designed, in particular ones that consider consumer preferences and reality. Here we introduce an auction model where buyers continuously place bids and the challenge is to decide whether or not to accept them. The model does not include a deadline for placing bids, and exhibits self-organized criticality; it presents a critical price from which a bid is accepted with probability one, and avalanches of sales above this value are observed. This model is especially interesting for startup companies interested in profit as well as making the product known on the market.

Keywords: Self-organized criticality; Participative pricing; Auction model (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chsofr:v:158:y:2022:i:c:s0960077922002387

DOI: 10.1016/j.chaos.2022.112028

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