AQFC2015

Promotion Planning for Network Goods

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Department of Systems Engineering and Engineering Management
The Chinese University of Hong Kong

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Date: 4:30pm-5:30pm, December 16 (Friday), 2016

Title: Promotion Planning for Network Goods

Speaker: Prof. Ningyuan Chen, Hong Kong University of Science and Technology

Abstract:
Network externality refers to the effect that an additional user of a
product or a service changes its value to other customers. Many
products/services of the modern age exhibit network externality, such
as social games, collaboration tools, fashion goods. The existence of
network externality significantly changes customers' behavior and
presents new challenges to firms attempting to promote products. We
provide a theoretical framework to analyze the firm’s dynamic pricing
decision for network goods. We demonstrate that it is optimal for the
firm to offer a discount initially until the total realized
externality exceeds a threshold that is determined by the network
structure. Then the firm should start charging a regular price as the
product already becomes popular. The network structure has a
significant impact on the decision and revenue. (1) A network with
stronger connectivity implies that the firm can capitalize it and make
more revenue. More importantly, the firm should be more patient and
offer discount for a longer period while charge a higher regular
price. (2) Heterogeneity of customers' connectivity in the network
always benefits the firm. (3) The knowledge of the network structure
may not be essential when the network is close to a regular graph.

Biography:
Ningyuan Chen is currently an assistant professor at the Department of
Industrial Engineering and Logistic Management of the Hong Kong
University of Science and Technology. He received his Ph.D. from the
Department of Industrial Engineering and Operations Research at
Columbia University. He was a postdoctoral associate at Yale School of
Management from 2015 to 2016. His research interest includes dynamic
pricing, market microstructure, applied probability and networks.

Everyone is welcome to attend the talk!

Venue: Room 513,
William M.W. Mong Engineering Building (ERB),
(Engineering Building Complex Phase 2)
The Chinese University of Hong Kong.

The talk will be hosted by:
Prof. Xiting Gong,
Department of Systems Engineering and Engineering Management,
The Chinese University of Hong Kong,
E-mail: xtgong@se.cuhk.edu.hk
Homepage: http://www1.se.cuhk.edu.hk/~xtgong/

SEEM-5201 Website: http://seminar.se.cuhk.edu.hk
Email: seem5201@se.cuhk.edu.hk

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Date: 
Friday, December 16, 2016 - 08:30 to 09:30