Pricing Strategies of Goods with Externalities

Mirta B. Gordon (), Jean-Pierre Nadal (), Denis Phan () and Viktoriya Semeshenko ()
Additional contact information
Mirta B. Gordon: Université Joseph Fourier
Viktoriya Semeshenko: National Scientific and Technical Research Council, Buenos Aires

European Journal of Economic and Social Systems, 2009, vol. 22, issue 1, 11-18

Abstract: This paper summarizes the effects of social influences in a monopoly market with heterogeneous agents. The market equilibria are presented in the limiting case of global influence. Considering static profit maximization there may exist two different regimes: to sell either to a large fraction of customers at a low price, or to a small fraction of them at a higher price. This arises for numerous mono-modal distributions of idiosyncratic willingness to pay if the social influence is strong enough. The seller's optimal strategy switches from one regime to the other at parameter values where the demand has two different Nash equilibria; but the strategy of posting low prices to attract large fractions of buyers may fail due to a lack of coordination.

Keywords: Binary Choice; Complex Systems; Heterogeneous Interacting Agents; Neighborhood Effects; Social Influence; Monopoly; Externalities (search for similar items in EconPapers)
JEL-codes: D42 D62 (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

Downloads: (external link)
http://ejess.revuesonline.com/article.jsp?articleId=13942 Full text (text/html)

Related works:
Working Paper: Pricing strategies of Goods with Externalities (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:ejessy:0059

Access Statistics for this article

European Journal of Economic and Social Systems is currently edited by Bernard Paulré and Stefano Lucarelli

More articles in European Journal of Economic and Social Systems from Lavoisier
Bibliographic data for series maintained by Stefano Lucarelli ( this e-mail address is bad, please contact ).