A Marketing Scheme for Making Money off Innocent People: A User's Manual

Kaushik Basu

Working Papers from Cornell University, Center for Analytic Economics

Abstract: Firms often give away free goods with the product that they sell. Firms often give stock options to their top management and other employees. Mixing these two practices--giving stock options to consumers who buy the firm's product--, creates a deadly brew. Large numbers of consumers can be lured into buying this product, giving the entrepreneur huge profits and the consumers a growing profit share. But this is a camouflaged Ponzi that will ultimately crash. By analogy it is argued that the common practice of giving stock options to employees can be a factor behind financial crashes.

JEL-codes: D92 G18 G32 L20 M30 (search for similar items in EconPapers)
Date: 2009-06
New Economics Papers: this item is included in nep-mkt
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Citations: View citations in EconPapers (1)

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Journal Article: A marketing scheme for making money off innocent people: A user's manual (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:corcae:09-09

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