We study the problems of pricing an indivisible product to consumers who are
embedded in a given social network. The goal is to maximize the revenue of the
seller. We assume impatient consumers who buy the product as soon as the seller
posts a price not greater than their values of the product. The product's value
for a consumer is determined by two factors: a fixed consumer-specified
intrinsic value and a variable externality that is exerted from the consumer's
neighbors in a linear way. We study the scenario of negative externalities,
which captures many interesting situations, but is much less understood in
comparison with its positive externality counterpart. We assume complete
information about the network, consumers' intrinsic values, and the negative
externalities. The maximum revenue is in general achieved by iterative pricing,
which offers impatient consumers a sequence of prices over time.
We prove that it is NP-hard to find an optimal iterative pricing, even for
unweighted tree networks with uniform intrinsic values. Complementary to the
hardness result, we design a 2-approximation algorithm for finding iterative
pricing in general weighted networks with (possibly) nonuniform intrinsic
values. We show that, as an approximation to optimal iterative pricing, single
pricing can work rather well for many interesting cases, but theoretically it
can behave arbitrarily bad
