Customer Sharing in Economic Networks with Costs

TL;DR

This paper introduces a customer sharing mechanism in economic networks that incentivizes sellers and customers to share and participate truthfully, leading to improved resource allocation and increased seller revenue.

Contribution

The paper proposes a novel mechanism that incentivizes information sharing among sellers and truthful participation by customers in economic networks.

Findings

CSM promotes efficient resource allocation.

CSM increases seller revenue.

CSM ensures truthful customer participation.

Abstract

In an economic market, sellers, infomediaries and customers constitute an economic network. Each seller has her own customer group and the seller's private customers are unobservable to other sellers. Therefore, a seller can only sell commodities among her own customers unless other sellers or infomediaries share her sale information to their customer groups. However, a seller is not incentivized to share others' sale information by default, which leads to inefficient resource allocation and limited revenue for the sale. To tackle this problem, we develop a novel mechanism called customer sharing mechanism (CSM) which incentivizes all sellers to share each other's sale information to their private customer groups. Furthermore, CSM also incentivizes all customers to truthfully participate in the sale. In the end, CSM not only allocates the commodities efficiently but also optimizes the seller's revenue.