Managing Consumer Referrals in a Chain Network
AbstractWe 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).
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 850.
Date of creation: 10 Jan 2014
Date of revision:
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More information through EDIRC
communication network; consumer referral policy; referral fee; price discrimination;
Find related papers by JEL classification:
- D4 - Microeconomics - - Market Structure and Pricing
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-08 (All new papers)
- NEP-COM-2014-02-08 (Industrial Competition)
- NEP-MKT-2014-02-08 (Marketing)
- NEP-NET-2014-02-08 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Simon P. Anderson & André de Palma, 2009.
RAND Journal of Economics,
RAND Corporation, vol. 40(4), pages 688-709.
- Jeong-Yoo Kim & Tackseung Jun, 2004.
"A theory of consumer referral,"
Econometric Society 2004 Far Eastern Meetings
488, Econometric Society.
- Maria Arbatskaya & Hideo Konishi, 2013. "Consumer Referrals," Boston College Working Papers in Economics 851, Boston College Department of Economics.
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