Discrimination through versioning with advertising in social networks
| Autor: | Antonio Jiménez-Martínez |
|---|---|
| Rok vydání: | 2018 |
| Předmět: |
0301 basic medicine
Service (business) Economics and Econometrics 05 social sciences Stochastic dominance Advertising Degree distribution Purchasing Product (business) 03 medical and health sciences 030104 developmental biology 0502 economics and business Revenue Inverse demand function Business 050207 economics Network effect |
| Zdroj: | Economic Theory. 67:525-564 |
| ISSN: | 1432-0479 0938-2259 |
| DOI: | 10.1007/s00199-018-1107-y |
| Popis: | This article investigates a second-degree discrimination scheme where an online platform sells a two-version service to consumers involved in a random network. In particular, consumers choose between purchasing a premium or a free version of the service. The premium version is sold at a price and enables higher network externalities than the free version. The free version includes advertising about some product—unrelated to the service. Under the assumptions that (a) advertising rotates clockwise the inverse demand of the advertised product and (b) the platform receives a fixed portion of the revenue from the sales of the advertised product, I explore (1) how the random network, and the market conditions for the advertised product, relate to the optimal pricing of the service, and (2) the welfare implications for the platform and the consumers. Hazard rate functions are crucial for optimal pricing, and first-order stochastic dominance of the degree distribution characterizes the welfare implications. The model provides foundations for empirical analysis on degree distributions and hazard rate functions underlying complex social networks. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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