Affiliated marketing |
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Authors: | M Tolga Akçura |
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Affiliation: | (1) Long Island University, CWPost Campus, Brookville, NY, USA |
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Abstract: | In information-intensive environments some firms may be sending their customers to other firms’ or affiliates’ websites in
order to generate additional sales for their affiliates. Although this may provide a choice for the customers, from a firm’s
point of view such strategies have the potential to cannibalize own sales. Hence, when customers purchase from other firms’
websites, the firm may loose its own customers. This study analyzes the optimality of such strategies using an analytical
framework. The findings show that a firm may increase its prices and profit when its own customers purchase from other firm
websites. An analysis of customer surplus and total welfare show that such strategies may have adverse effects. The results
show that customer surplus and total welfare may decrease as a result of affiliations. |
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Keywords: | |
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