Managing Consumer Referrals in a Chain Network

Maria Arbatskaya and Hideo Konishi

No 850, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: We consider the optimal pricing and referral strategy of a monopoly that uses a simple consumer communication network (a chain) to spread product information. The first-best policy with fully discriminatory position-based referral fees involves standard monopoly pricing and referral fees that provide consumers with strictly positive referral incentives. Effective price discrimination among consumers based on their positions in the chain occurs in both the first-best solution and the second-best solution (with a common referral fee).

Keywords: communication network; consumer referral policy; referral fee; price discrimination (search for similar items in EconPapers)
JEL-codes: D4 D8 L1 (search for similar items in EconPapers)
Date: 2014-01-10, Revised 2016-11-01
New Economics Papers: this item is included in nep-com, nep-mkt and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published, Review of Network Economics, 13, 69-94, 2014

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Related works:
Journal Article: Managing Consumer Referrals on a Chain Network (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:boc:bocoec:850

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