Information Aggregation in Large Collective Purchases

70 Pages Posted: 7 Apr 2021

See all articles by Itai Arieli

Itai Arieli

Technion-Israel Institute of Technology

Moran Koren

Ben Gurion University of the Negev

Rann Smorodinsky

Technion-Israel Institute of Technology - The William Davidson Faculty of Industrial Engineering & Management

Multiple version iconThere are 2 versions of this paper

Date Written: March 22, 2021

Abstract

We study a monopolist that uses the following scheme to gauge market traction for its common-value, excludible product. The monopolist offers its product at a given price, and each potential consumer decides whether to buy it. The contributions are collected. The product is supplied only if the total demand exceeds some threshold set by the monopolist, as is common in crowdfunding platforms and collective-buying sites. We study how well such collective purchase scenarios perform from: (1) the monopolist's perspective, in terms of market penetration, and (2) from the society's perspective, in terms of efficiency and social welfare.

Keywords: Welfare, Efficiency, Information, Markets, Crowdfunding, Voting, Game Theory

JEL Classification: D71, D82, D83, D61, M2

Suggested Citation

Arieli, Itai and Koren, Moran and Smorodinsky, Rann, Information Aggregation in Large Collective Purchases (March 22, 2021). Available at SSRN: https://ssrn.com/abstract=3809655 or http://dx.doi.org/10.2139/ssrn.3809655

Itai Arieli

Technion-Israel Institute of Technology ( email )

Technion City
Haifa 32000, Haifa 32000
Israel

Moran Koren (Contact Author)

Ben Gurion University of the Negev ( email )

Beersheba
Israel

Rann Smorodinsky

Technion-Israel Institute of Technology - The William Davidson Faculty of Industrial Engineering & Management ( email )

Haifa 32000
Israel

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