f3badd75_trepreneurship___Bauer_College__Topic
[Date] March 25 [Speaker] Bikram Ghosh South Carolina [Topic] 
"Sharing Information Goods Within Consumer Networks: Implications for Pricing and Profits" Click here to read Abstract Given the ease with which many information goods can be shared, consumers some- times form groups to purchase a single information good and share it. Although firms cannot directly observe this group process, they need not ignore it when set- ting prices. To examine the effect of sharing information goods on profits, we use a graph theoretic model to capture probabilistic formation of consumers into sharing groups. We find that, while sharing within groups will often have the intuitive effect of decreasing profits, this need not always be the case if the firm sets prices in anticipation of sharing. Our analysis shows that sharing can increase profits, and that the marginal impact of additional sharing on profits is always positive when the probability of sharing is already sufficiently high. This is because higher sharing levels can enable a firm to tailor its prices to groups of consumers rather than to individuals. We describe how the effects of sharing depend on the consumer network structure, the group decision mechanism, and the presence of homophily in group formation. Our findings have implications for global pricing strategies of information goods.
Spring 11 Seminars - Dept. of Marketing & Entrepreneurship | Bauer College
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