Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70454
Authors: 
Basu, Kaushik
Year of Publication: 
2009
Series/Report no.: 
CAE Working Paper 09-09
Abstract: 
Firms often give away free goods with the product that they sell. Firms often give stock options to their top management and other employees. Mixing these two practices-giving stock options to consumers who buy the firm's product-, creates a deadly brew. Large numbers of consumers can be lured into buying this product, giving the entrepreneur huge profits and the consumers a growing profit share. But this is a camouflaged Ponzi that will ultimately crash. By analogy it is argued that the common practice of giving stock options to employees can be a factor behind financial crashes.
Subjects: 
marketing
stock options
financial scams
product bundling
JEL: 
M30
G18
G32
L20
D92
Document Type: 
Working Paper

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