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Elliot Lipnowski (Columbia University)

25 October 2022 @ 12:00 - 13:15


  • Past event


25 October 2022
12:00 - 13:15
Event Category:
Academic Events

Pricing for Coordination

joint with Marina Halac and Daniel Rappoport

Abstract. A seller prices a good with positive network externalities. Purchasing decisions being complementary, a pricing policy typically yields equilibrium multiplicity. We study how personalized pricing can be used to mitigate this strategic uncertainty, guaranteeing a high revenue. An optimal policy offers personalized discounts to successively insulate against low-demand equilibria, and posts a high price to extract revenue from the induced higher demand. The result is price dispersion and a higher quantity of trade than would occur if the seller could choose her preferred equilibrium.