A Marketing Scheme for Making Money off Innocent People: A User's Manual
AbstractFirms 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.
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Bibliographic InfoPaper provided by Cornell University, Center for Analytic Economics in its series Working Papers with number 09-09.
Date of creation: Jun 2009
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Other versions of this item:
- Basu, Kaushik, 2010. "A marketing scheme for making money off innocent people: A user's manual," Economics Letters, Elsevier, vol. 107(2), pages 122-124, May.
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- M30 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - General
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