Pricing social goods

Alon Eden, Tomer Ezra, Michal Feldman

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Social goods are goods that grant value not only to their owners but also to the owners' surroundings, be it their families, friends or office mates. The benefit a non-owner derives from the good is affected by many factors, including the type of the good, its availability, and the social status of the non-owner. Depending on the magnitude of the benefit and on the price of the good, a potential buyer might stay away from purchasing the good, hoping to free ride on others' purchases. A revenue-maximizing seller who sells social goods must take these considerations into account when setting prices for the good. The literature on optimal pricing has advanced considerably over the last decade, but little is known about optimal pricing schemes for selling social goods. In this paper, we conduct a systematic study of revenue-maximizing pricing schemes for social goods: We introduce a Bayesian model for this scenario, and devise nearly-optimal pricing schemes for various types of externalities, both for simultaneous sales and for sequential sales.

Original languageAmerican English
Title of host publication25th European Symposium on Algorithms, ESA 2017
EditorsChristian Sohler, Christian Sohler, Kirk Pruhs
PublisherSchloss Dagstuhl- Leibniz-Zentrum fur Informatik GmbH, Dagstuhl Publishing
ISBN (Electronic)9783959770491
DOIs
StatePublished - 1 Sep 2017
Externally publishedYes
Event25th European Symposium on Algorithms, ESA 2017 - Vienna, Austria
Duration: 4 Sep 20176 Sep 2017

Publication series

NameLeibniz International Proceedings in Informatics, LIPIcs
Volume87
ISSN (Print)1868-8969

Conference

Conference25th European Symposium on Algorithms, ESA 2017
Country/TerritoryAustria
CityVienna
Period4/09/176/09/17

Keywords

  • Externalities
  • Posted prices
  • Public goods
  • Revenue maximization

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