Equilibrium pricing with positive externalities

Nima Ahmadipouranari, Shayan Ehsani, Mohammad Ghodsi, Nima Haghpanah Jahromi, Nicole Immorlica, Hamid Mahini, Vahab Mirrokni

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

We study the problem of selling an item to strategic buyers in the presence of positive historical externalities, where the value of a product increases as more people buy and use it. This increase in the value of the product is the result of resolving bugs or security holes after more usage. We consider a continuum of buyers that are partitioned into types where each type has a valuation function based on the actions of other buyers. Given a fixed sequence of prices, or price trajectory, buyers choose a day on which to purchase the product, i.e. they have to decide whether to purchase the product early in the game or later after more people already own it. We model this strategic setting as a game, study existence and uniqueness of the equilibria, and design an FPTAS to compute an approximately revenue-maximizing pricing trajectory for the seller in two special cases: the symmetric settings in which there is just a single buyer type, and the linear settings that are characterized by an initial type-independent bias and a linear type-dependent influenceability coefficient.

Original languageEnglish (US)
Pages (from-to)1-15
Number of pages15
JournalTheoretical Computer Science
Volume476
DOIs
StatePublished - Mar 11 2013

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Externalities
Pricing
Trajectories
Costs
Sales
Trajectory
FPTAS
Game
Valuation
Continuum
Existence and Uniqueness
Choose
Dependent
Coefficient

All Science Journal Classification (ASJC) codes

  • Theoretical Computer Science
  • Computer Science(all)

Cite this

Ahmadipouranari, N., Ehsani, S., Ghodsi, M., Haghpanah Jahromi, N., Immorlica, N., Mahini, H., & Mirrokni, V. (2013). Equilibrium pricing with positive externalities. Theoretical Computer Science, 476, 1-15. https://doi.org/10.1016/j.tcs.2013.01.014
Ahmadipouranari, Nima ; Ehsani, Shayan ; Ghodsi, Mohammad ; Haghpanah Jahromi, Nima ; Immorlica, Nicole ; Mahini, Hamid ; Mirrokni, Vahab. / Equilibrium pricing with positive externalities. In: Theoretical Computer Science. 2013 ; Vol. 476. pp. 1-15.
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Ahmadipouranari, N, Ehsani, S, Ghodsi, M, Haghpanah Jahromi, N, Immorlica, N, Mahini, H & Mirrokni, V 2013, 'Equilibrium pricing with positive externalities', Theoretical Computer Science, vol. 476, pp. 1-15. https://doi.org/10.1016/j.tcs.2013.01.014

Equilibrium pricing with positive externalities. / Ahmadipouranari, Nima; Ehsani, Shayan; Ghodsi, Mohammad; Haghpanah Jahromi, Nima; Immorlica, Nicole; Mahini, Hamid; Mirrokni, Vahab.

In: Theoretical Computer Science, Vol. 476, 11.03.2013, p. 1-15.

Research output: Contribution to journalArticle

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Ahmadipouranari N, Ehsani S, Ghodsi M, Haghpanah Jahromi N, Immorlica N, Mahini H et al. Equilibrium pricing with positive externalities. Theoretical Computer Science. 2013 Mar 11;476:1-15. https://doi.org/10.1016/j.tcs.2013.01.014