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- W3123684238 abstract "We study the incentives of a network to control two types of circulating on its platform, namely display advertising by two quality-differentiated firms and social information (purchasing decisions shared among consumers). Consumers' choices are influenced by both of these communication channels, whereas the network gets revenue only through advertising. We characterize the equilibrium level of network diffusion of and the firms' expenditure on advertising. We show that depending on consumers' heterogeneous response to advertising, can compete with or complement display advertising. Moreover, in every equilibrium each consumer almost surely purchases the superior product with a strictly higher probability, and that receiving almost surely further increases such probability. Finally, almost surely raises welfare, thereby establishing the existence of a welfare-maximizing equilibrium." @default.
- W3123684238 created "2021-02-01" @default.
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- W3123684238 date "2018-01-01" @default.
- W3123684238 modified "2023-09-23" @default.
- W3123684238 title "Social Information and Consumer Heterogeneity" @default.
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- W3123684238 doi "https://doi.org/10.2139/ssrn.3246956" @default.
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