Sellers sometimes offer goods for sale under both a regular price and a discount for group purchase if the consumer group reaches some minimum size. This selling practice, which we term interpersonal bundling, has been popularized on the Internet by companies such as Groupon. We explain why interpersonal bundling is a profitable strategy in the presence of demand uncertainty, and how it may further boost profits by stimulating product information dissemination. Other reasons for its profitability are also discussed. We provide sufficient conditions for interpersonal bundling to dominate separate selling, and identify factors that determine the size of its profit advantage.
|Published - 14 Dec 2012
|The 7th Biennial Conference of Hong Kong Economic Association - Lingnan University, Hong Kong, Hong Kong
Duration: 13 Dec 2012 → 14 Dec 2012
|The 7th Biennial Conference of Hong Kong Economic Association
|13/12/12 → 14/12/12
|The Hong Kong Economic Association has been hosting its biennial conferences in Hong Kong since 2000. Each time we had world class scholars including Nobel Laureates in Economics and prominent leaders including the Financial Secretary and the Secretary for Financial Services to serve as keynote speakers. Each time it is well attended, with participants coming from countries across the world. The success of this event has been made possible by the united effort of all seven universities in Hong Kong. The 7th biennial conference will be held at Lingnan University of Hong Kong during December 13-14, 2012. The Association would like to thank Sun Hung Kai Properties and Real Estate Developers Association of Hong Kong for their generous supports.