"Optimal Sales Schemes for Network Goods", Alexei Parakhonyak, University of Oxford, Department of Economics

Abstract

This paper explores how to best sequence sales in the presence of network effects. A monopolist sets a price for its product and also chooses whether to serve some consumers before others through its choice of sales scheme. We show that a firm with imperfect control over sequencing should serve consumers as sequentially as possible, with consumers in smaller groups served first, and that the optimal sales scheme is fully sequential. Under a fully sequential scheme, each consumer observes previous sales before choosing whether to buy himself, and independent-minded consumers can act as opinion leaders for those who follow.

 sem_19_Optimal Sales Schemes for Network Goods, Alexei Parakhonyak (PDF, 940 Кб)