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Social learning and monopolist's product launching strategy

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A monopolist launches a new product to distinct markets. The monopolist does not know the quality of the product while consumers in each market receive some private information about the quality. We study how the monopolist may in°uence consumer learning by manipulating the launching sequence when both the monopolist and con- sumers can learn about the quality of the product from previous sales. We derive conditions under which the monopolist prefers a sequential launch to a simultaneous launch. The conditions depend on the price of the product and the general reputation of the product. We derive the optimal number of markets in which the monopolist will launch the product in each period. The monopolist's dynamic equilibrium strategy endogenizes informational herding.

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en

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application/pdf

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http://eprints.lse.ac.uk/4921/1/social_learning_and_monopolists_product_launching_LSERO.pdf

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