Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10437690 | Journal of Economic Behavior & Organization | 2014 | 22 Pages |
Abstract
This paper offers an information-based model of social interaction, and analyzes optimal investment and pricing of services that facilitate interaction in a duopoly. Agents have uncertainty over their preferences but are aware that they are correlated with others', so there exists an incentive to communicate with others in the population. When a firm's good can be bundled with a coordination mechanism for its consumers, its value is endogenously determined due to a consumption externality. Although this mechanism increases total surplus, it is underprovided and consumer surplus decreases.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Alice Hsiaw,