A Theory of Consumer Referral: Revisited
Jun and Kim (2008) consider the optimal pricing and referral strategy of a monopoly that uses a consumer communication network to spread product information. They show that for any finite referral chain, the optimal policy involves a referral fee that provides strictly positive referral incentives and effective price discrimination among consumers based on their positions in the chain. We revisit this problem to strengthen Jun and Kim's results by weakening their referral condition. Moreover, we characterize the first-best policy when individual-specific referral fees are available and show that it is qualitatively similar to the second-best solution of Jun and Kim (2008).
|Date of creation:||Oct 2013|
|Date of revision:|
|Contact details of provider:|| Web page: http://economics.emory.edu/home/journals/|
More information through EDIRC
References listed on IDEAS
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.:
- Jeong-Yoo Kim & Tackseung Jun, 2004.
"A theory of consumer referral,"
Econometric Society 2004 Far Eastern Meetings
488, Econometric Society.
When requesting a correction, please mention this item's handle: RePEc:emo:wp2003:1311. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sue Mialon)
If references are entirely missing, you can add them using this form.