Optimal Sales Schemes for Network Goods

Research output: Contribution to journalJournal articlepeer-review

Standard

Optimal Sales Schemes for Network Goods. / Parakhonyak, Alexei; Vikander, Nick.

In: Management Science, Vol. 65, No. 2, 2019, p. 819-841.

Research output: Contribution to journalJournal articlepeer-review

Harvard

Parakhonyak, A & Vikander, N 2019, 'Optimal Sales Schemes for Network Goods', Management Science, vol. 65, no. 2, pp. 819-841. https://doi.org/10.1287/mnsc.2017.2972

APA

Parakhonyak, A., & Vikander, N. (2019). Optimal Sales Schemes for Network Goods. Management Science, 65(2), 819-841. https://doi.org/10.1287/mnsc.2017.2972

Vancouver

Parakhonyak A, Vikander N. Optimal Sales Schemes for Network Goods. Management Science. 2019;65(2):819-841. https://doi.org/10.1287/mnsc.2017.2972

Author

Parakhonyak, Alexei ; Vikander, Nick. / Optimal Sales Schemes for Network Goods. In: Management Science. 2019 ; Vol. 65, No. 2. pp. 819-841.

Bibtex

@article{dde6bd7c28b240d386263b38fea459b1,
title = "Optimal Sales Schemes for Network Goods",
abstract = "This paper considers a monopolist{\textquoteright}s product-launch strategy in the presence of network effects, focusing on how to exploit these effects to the maximum possible extent. In our formal framework, the firm sets a price for its product and chooses a sales scheme, which effectively determines how consumers can learn from each other about the product{\textquoteright}s popularity. Our results on the profitability of different schemes provide insights on a variety of managerial issues that are of practical relevance for product launch. Specifically, to best exploit network effects, our results suggest releasing preorder and sales information to consumers. They also suggest taking a sequential approach to multimarket product launch, launching first in smaller markets before larger ones. Moreover, they identify possible benefits of promoting prerelease consumer communication, and they support the idea of targeting independent-minded consumers, so they can serve as opinion leaders for those who follow.",
keywords = "Faculty of Social Sciences, product launch, network effects, sequencing of sales",
author = "Alexei Parakhonyak and Nick Vikander",
year = "2019",
doi = "10.1287/mnsc.2017.2972",
language = "English",
volume = "65",
pages = "819--841",
journal = "Management Science",
issn = "0025-1909",
publisher = "Institute for Operations Research and the Management Sciences (I N F O R M S)",
number = "2",

}

RIS

TY - JOUR

T1 - Optimal Sales Schemes for Network Goods

AU - Parakhonyak, Alexei

AU - Vikander, Nick

PY - 2019

Y1 - 2019

N2 - This paper considers a monopolist’s product-launch strategy in the presence of network effects, focusing on how to exploit these effects to the maximum possible extent. In our formal framework, the firm sets a price for its product and chooses a sales scheme, which effectively determines how consumers can learn from each other about the product’s popularity. Our results on the profitability of different schemes provide insights on a variety of managerial issues that are of practical relevance for product launch. Specifically, to best exploit network effects, our results suggest releasing preorder and sales information to consumers. They also suggest taking a sequential approach to multimarket product launch, launching first in smaller markets before larger ones. Moreover, they identify possible benefits of promoting prerelease consumer communication, and they support the idea of targeting independent-minded consumers, so they can serve as opinion leaders for those who follow.

AB - This paper considers a monopolist’s product-launch strategy in the presence of network effects, focusing on how to exploit these effects to the maximum possible extent. In our formal framework, the firm sets a price for its product and chooses a sales scheme, which effectively determines how consumers can learn from each other about the product’s popularity. Our results on the profitability of different schemes provide insights on a variety of managerial issues that are of practical relevance for product launch. Specifically, to best exploit network effects, our results suggest releasing preorder and sales information to consumers. They also suggest taking a sequential approach to multimarket product launch, launching first in smaller markets before larger ones. Moreover, they identify possible benefits of promoting prerelease consumer communication, and they support the idea of targeting independent-minded consumers, so they can serve as opinion leaders for those who follow.

KW - Faculty of Social Sciences

KW - product launch

KW - network effects

KW - sequencing of sales

U2 - 10.1287/mnsc.2017.2972

DO - 10.1287/mnsc.2017.2972

M3 - Journal article

VL - 65

SP - 819

EP - 841

JO - Management Science

JF - Management Science

SN - 0025-1909

IS - 2

ER -

ID: 202239030