Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2021
  • Working Paper

Information Spillovers in Experience Goods Competition

By: Zhuoqiong Charlie Chen, Christopher Stanton and Catherine Thomas
  • Format:Print
  • | Language:English
ShareBar

Abstract

When experience goods compete, consuming one product can be informative about value for similar untried products. We study a two-period model of duopoly competition in markets that have this feature and where firms can price discriminate between consumers based on purchasing history. Price dynamics, firm profits, and consumer surplus depend on how information spillovers shape demand from the consumers who have trialed the rival product—the potential switchers. In the first period, rather than competing intensely for all future profits, firms compete only for the difference in future profits between repeat and switching consumers. Demand-side information spillovers offer an explanation of how competing firms in new product markets can be profitable in all periods even when selling products that are indistinguishable ex ante.

Keywords

Experience Goods; Competition; Information; Valuation; Consumer Behavior; Demand and Consumers; Price

Citation

Chen, Zhuoqiong Charlie, Christopher Stanton, and Catherine Thomas. "Information Spillovers in Experience Goods Competition." NBER Working Paper Series, No. 28584, March 2021. (Minor Revise and Resubmit at Management Science.)
  • Find it at Harvard
  • Read Now

About The Author

Christopher T. Stanton

Entrepreneurial Management
→More Publications

More from the Authors

    • December 2021
    • Management Science

    Employee Responses to Compensation Changes: Evidence from a Sales Firm

    By: Jason Sandvik, Richard Saouma, Nathan Seegert and Christopher Stanton
    • 2021
    • Faculty Research

    Who Benefits from Online Gig Economy Platforms?

    By: Christopher Stanton and Catherine Thomas
    • August 2021
    • Faculty Research

    Zoom Video Communications: Building a Culture of Diversity, Equity, & Inclusion During COVID-19

    By: Karen G. Mills, Scott Duke Kominers, Christopher Stanton, Andy Wu, George Gonzalez and Gabriella Elanbeck
More from the Authors
  • Employee Responses to Compensation Changes: Evidence from a Sales Firm By: Jason Sandvik, Richard Saouma, Nathan Seegert and Christopher Stanton
  • Who Benefits from Online Gig Economy Platforms? By: Christopher Stanton and Catherine Thomas
  • Zoom Video Communications: Building a Culture of Diversity, Equity, & Inclusion During COVID-19 By: Karen G. Mills, Scott Duke Kominers, Christopher Stanton, Andy Wu, George Gonzalez and Gabriella Elanbeck
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College