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Pricing strategies of Goods with Externalities

Author

Listed:
  • Denis Phan

    (GEMASS - Groupe d'Etude des Méthodes de l'Analyse Sociologique de la Sorbonne - FMSH - Fondation Maison des sciences de l'homme - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique)

  • Mirta B. Gordon

    (AMA - Analyse de données, Modélisation et Apprentissage automatique [Grenoble] - LIG - Laboratoire d'Informatique de Grenoble - UPMF - Université Pierre Mendès France - Grenoble 2 - UJF - Université Joseph Fourier - Grenoble 1 - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INPG - Institut National Polytechnique de Grenoble - CNRS - Centre National de la Recherche Scientifique)

  • Jean-Pierre Nadal

    (CAMS - Centre d'Analyse et de Mathématique sociales - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, LPS - Laboratoire de Physique Statistique de l'ENS - FRDPENS - Fédération de recherche du Département de physique de l'Ecole Normale Supérieure - ENS Paris - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique - UPMC - Université Pierre et Marie Curie - Paris 6 - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique)

  • Viktoriya Semeshenko

    (Departamento de Economía [Buenos Aires] - Facultad de Ciencias Económicas [Buenos Aires] - UBA - Universidad de Buenos Aires [Buenos Aires], TIMC-IMAG - Techniques de l'Ingénierie Médicale et de la Complexité - Informatique, Mathématiques et Applications, Grenoble - UMR 5525 - UJF - Université Joseph Fourier - Grenoble 1 - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - VAS - VetAgro Sup - Institut national d'enseignement supérieur et de recherche en alimentation, santé animale, sciences agronomiques et de l'environnement - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper summarizes the effects of social influences in a monopoly market with heterogeneous agents. The market equilibria are presented in the limiting case of global influence. Considering static profit maximization there may exist two different regimes: to sell either to a large fraction of customers at a low price, or to a small fraction of them at a higher price. This arises for numerous mono-modal distributions of idiosyncratic willingness to pay if the social influence is strong enough. The seller's optimal strategy switches from one regime to the other at parameter values where the demand has two different Nash equilibria; but the strategy of posting low prices to attract large fractions of buyers may fail due to a lack of coordination.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Denis Phan & Mirta B. Gordon & Jean-Pierre Nadal & Viktoriya Semeshenko, 2009. "Pricing strategies of Goods with Externalities," Post-Print halshs-04005022, HAL.
    • Handle: RePEc:hal:journl:halshs-04005022
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    Keywords

    Binary Choice; Complex Systems; Heterogeneous Interacting Agents; Neighbourhood Effects; Social Influence.;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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