On Fixed-Price Marketing for Goods with Positive Network Externalities

In this paper we discuss marketing strategies for goods that have positive network externalities, i.e., when a buyer’s value for an item is positively influenced by others owning the item. We investigate revenue-optimal strategies of a specific form where the seller gives the item for free to a set of users, and then sets a fixed price for the rest. We present a 1 2 -approximation for this problem under assumptions about the form of the externality. To do so, we apply ideas from the influence maximization literature [13] and also use a recent result on non-negative submodular maximization as a blax-box [3, 7].