Use prices as sales agents

Ren Wang, Jie Hou and Hui Song

Managerial and Decision Economics, 2020, vol. 41, issue 7, 1349-1364

Abstract: We use a monopoly model with consumer heterogeneity to study the profitability of group buying, in which the discounted price is offered to consumers if more than a certain number of them agree to make purchases. We find that group buying generally outperforms intertemporal pricing but is outperformed by a referral reward program. The optimal minimum requirement depends on parameters. If a consumer and her invitee have homogeneous preference and there is no discount of future utility, a pricing strategy characterized by the low (medium) minimum requirement is always dominated by high minimum requirement, whose profit coincides with one‐person group buying.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/mde.3180

Related works:
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:wly:mgtdec:v:41:y:2020:i:7:p:1349-1364

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().