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- Publisher
- Wiley
- Copyright
- "© 2019 The RAND Corporation"
- ISSN
- 0741-6261
- eISSN
- 1756-2171
- DOI
- 10.1111/1756-2171.12268
- Publisher site
- See Article on Publisher Site
Abstract
Learning from friends is a key process by which consumers acquire information about available products. This article embeds social learning in a model of firms producing differentiated products. I consider how the structure of social relationships between consumers influences pricing and welfare. In particular, how a variety of characteristics of social networks ‐ distribution of friendships, homophily, clustering, and correlations between an individual's preferences and number of friends ‐ influence these outcomes. I also find conditions under which consumer awareness and the sensitivity of demand to prices are useful measures of the informational efficiency of markets.
Journal
The Rand Journal of Economics – Wiley
Published: Mar 1, 2019