This paper studies the practice of influencer marketing in oligopoly markets and its effect on market efficiency. We develop a duopoly model in which firms sell horizontally differentiated products. Consumers are influenced by other consumers' choices, and some consumers are more influential than others. Firms' influencer marketing strategy involves discovering the influence of a subset of consumers and price discriminating based on this information.In equilibrium, firms subsidize consumers whose influence is above average and charge premia to below average influential consumers; the equilibrium premia/discounts depend on the strength of network effects and the level of information that firms have on consumers' influence. From a normative perspective, we show that influencer marketing leads to inefficient consumer-product matches. Firms' investments in discovering consumers' networks are strategic complements, leading to a race for information acquisition that erodes total surplus and firms' profits but increases consumer surplus.

In this paper, we formulate a differential game model to investigate firms' competition in both price and product R&D. The significant features of our research include: (i) incorporating the factor of network effects into the framework of continuous dynamic competition; (ii) considering the consumers' adaptive learning about the network size in the spirit of behavioral economics. Our analysis mainly suggests: (i) The network effects and consumers' adaptive learning comprehensively have negative effects on the result of price competition but has nothing to do with the result of R&D competition under duopoly, which is not true as the number of firms increases; (ii) the incentive to acquire competitors' state information is increasing with the intensity of network effects and the consumers' learning speed; (iii) when we consider the competition among more than three firms under feedback information structure, the competition intensity has negative effect on the steady-state quality stock; (iv) in a market where the consumers show strong price sensitivity, the product quality is under-provided compared with the first-best optimal level regardless of the choice of solution concept.

There are few industries in modern market economies that do not manufacture differentiated products. This book provides a systematic explanation and analysis of the widespread prevalence of this important category of products. The authors concentrate on models in which product selection is endogenous. In the first four chapters they consider models that try to predict the level of product differentiation that would emerge in situations of market equilibrium. These market equilibria with differentiated products are characterised and then compared with social welfare optima. Particular attention is paid to the distinction between horizontal and vertical differentiation as well as to the related issues of product quality and durability. This book brings together the most important theoretical contributions to these topics in a succinct and coherent manner. One of its major strengths is the way in which it carefully sets out the basic intuition behind the formal results. It will be useful to advanced undergraduate and graduate students taking courses in industrial economics and microeconomic theory.

Determinants of firm and market organization; Analysis of market behavior; Empirical methods and results; International issues and comparision; government intervention in the Marketplace.