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Long‐term competition for product awareness with learning from friends

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  • Qiang Gong
  • Yujing Xu
  • Huanxing Yang

Abstract

We study a dynamic model of price competition with differentiated products in which new generations of consumers acquire information about available products from their friends of previous generations. The social network, which links consumers across generations, affects the evolution of consumers' awareness of products and firms' long‐term (steady‐state) market shares. Focusing on steady‐state equilibria, we examine how the structure of the social network—including connectivity and homophily—influences market shares, pricing, and welfare.

Suggested Citation

  • Qiang Gong & Yujing Xu & Huanxing Yang, 2024. "Long‐term competition for product awareness with learning from friends," RAND Journal of Economics, RAND Corporation, vol. 55(2), pages 324-355, June.
    • Handle: RePEc:bla:randje:v:55:y:2024:i:2:p:324-355
    DOI: 10.1111/1756-2171.12467
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