Social learning with differentiated products

Research output: Contribution to journalArticleResearchpeer-review

Abstract

Learning from friends is a key process by which consumers acquire information about available products. This article embeds social learning in a model of firms producing differentiated products. I consider how the structure of social relationships between consumers influences pricing and welfare. In particular, how a variety of characteristics of social networks - distribution of friendships, homophily, clustering, and correlations between an individual's preferences and number of friends - influence these outcomes. I also find conditions under which consumer awareness and the sensitivity of demand to prices are useful measures of the informational efficiency of markets.

Original languageEnglish
Pages (from-to)226-248
Number of pages23
JournalThe Rand Journal of Economics
Volume50
Issue number1
DOIs
Publication statusPublished - 2019

Cite this

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abstract = "Learning from friends is a key process by which consumers acquire information about available products. This article embeds social learning in a model of firms producing differentiated products. I consider how the structure of social relationships between consumers influences pricing and welfare. In particular, how a variety of characteristics of social networks - distribution of friendships, homophily, clustering, and correlations between an individual's preferences and number of friends - influence these outcomes. I also find conditions under which consumer awareness and the sensitivity of demand to prices are useful measures of the informational efficiency of markets.",
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Social learning with differentiated products. / Campbell, Arthur.

In: The Rand Journal of Economics, Vol. 50, No. 1, 2019, p. 226-248.

Research output: Contribution to journalArticleResearchpeer-review

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