IDEAS home Printed from https://ideas.repec.org/p/bon/boncrc/crctr224_2025_657.html
   My bibliography  Save this paper

Endorsements and Referrals: Product Recommendations in Bilateral Trade

Author

Listed:
  • Peter Achim
  • Bojia Li
  • Lily Ling Yang

Abstract

This paper examines how a monopoly seller strategically employs pricing strategies and incentive mechanisms to influence consumer learning in the presence of a third-party information provider. Without direct payments, the seller influences consumer learning indirectly through distinct pricing strategies, which either deter or induce information acquisition. With direct payments, the seller can influence recommendations directly. "Endorsements", which tie payments to recommendations, remove informativeness and unambiguously harm the buyer. In contrast, "referrals", which tie payments to sales, can enhance consumer surplus and can even lead to Pareto improvements.

Suggested Citation

  • Peter Achim & Bojia Li & Lily Ling Yang, 2025. "Endorsements and Referrals: Product Recommendations in Bilateral Trade," CRC TR 224 Discussion Paper Series crctr224_2025_657, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_657
    as

    Download full text from publisher

    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp657
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Consumer learning; Monopoly pricing; Third-party information provision;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bon:boncrc:crctr224_2025_657. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CRC Office (email available below). General contact details of provider: https://www.crctr224.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.