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Customer Sharing in Economic Networks with Costs

Author

Listed:
  • Bin Li
  • Dong Hao
  • Dengji Zhao
  • Tao Zhou

Abstract

In an economic market, sellers, infomediaries and customers constitute an economic network. Each seller has her own customer group and the seller's private customers are unobservable to other sellers. Therefore, a seller can only sell commodities among her own customers unless other sellers or infomediaries share her sale information to their customer groups. However, a seller is not incentivized to share others' sale information by default, which leads to inefficient resource allocation and limited revenue for the sale. To tackle this problem, we develop a novel mechanism called customer sharing mechanism (CSM) which incentivizes all sellers to share each other's sale information to their private customer groups. Furthermore, CSM also incentivizes all customers to truthfully participate in the sale. In the end, CSM not only allocates the commodities efficiently but also optimizes the seller's revenue.

Suggested Citation

  • Bin Li & Dong Hao & Dengji Zhao & Tao Zhou, 2018. "Customer Sharing in Economic Networks with Costs," Papers 1807.06822, arXiv.org.
    • Handle: RePEc:arx:papers:1807.06822
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    References listed on IDEAS

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    Cited by:

    1. Rangeet Bhattacharyya & Parvik Dave & Palash Dey & Swaprava Nath, 2022. "Optimal Referral Auction Design," Papers 2208.09326, arXiv.org, revised Jul 2023.
    2. Mrinal SAIKIA & Prakash DAS & Disha NEOG, 2023. "Evolution of growth theory: from Harrod to Romer," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(635), S), pages 125-138, Summer.
    3. Herrmann-Pillath, Carsten, 2023. "The universal commons: An economic theory of ecosystem ownership," Ecological Economics, Elsevier, vol. 208(C).
    4. Yuhang Guo & Dong Hao & Bin Li, 2022. "Combinatorial Procurement Auction in Social Networks," Papers 2208.14591, arXiv.org.
    5. Dengji Zhao, 2021. "Mechanism Design Powered by Social Interactions," Papers 2102.10347, arXiv.org.
    6. Bin Li & Dong Hao & Dengji Zhao, 2020. "Incentive-Compatible Diffusion Auctions," Papers 2001.06975, arXiv.org, revised Apr 2020.

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