Pricing in Social Networks with Negative Externalities

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Provided by: Cornell University
Topic: Networking
Format: PDF
The authors study the problems of pricing an indivisible product to consumers who are embedded in a given social network. The goal is to maximize the revenue of the seller. They assume impatient consumers who buy the product as soon as the seller posts a price not greater than their values of the product. The product's value for a consumer is determined by two factors: a fixed consumer-specified intrinsic value and a variable externality that is exerted from the consumer's neighbors in a linear way.
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