Opinion Leaders, Influence Activities and Leadership Rents

WZB, Markets and Political Economy Working Paper No. SP II 2003-29

21 Pages Posted: 21 Feb 2004

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Date Written: December 2003

Abstract

Consumers may observe previous consumers' choices. They may follow their choices if they think these consumers are better informed. In turn, firms may concentrate on influencing the early consumers. This, in turn, changes the nature of early consumers' choice behavior as a signal for other consumers. In this paper, I show that firms' influence activities need not distort earlier consumers' decisions, but may reduce the informative value of these decisions for other consumers if influence activities are noisy or if some firms have deep pockets and others are liquidity constrained.

Keywords: Opinion leaders, influence activities, promotional competition, leadership, deep pockets, liquidity constraints

JEL Classification: D43, D72, L15

Suggested Citation

Konrad, Kai A., Opinion Leaders, Influence Activities and Leadership Rents (December 2003). WZB, Markets and Political Economy Working Paper No. SP II 2003-29, Available at SSRN: https://ssrn.com/abstract=505022 or http://dx.doi.org/10.2139/ssrn.505022

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

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Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

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United Kingdom

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, 81679
Germany

IZA Institute of Labor Economics

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Bonn, 53072
Germany

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