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Monopoly pricing of social goods

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  • Sääskilahti, Pekka

Abstract

We analyse the roles of social network topology and size on the monopoly pricing of network goods in a market, where consumers interact with each other and are characterised by their social relations. The size effect is the well-known network externalities phenomenon, while the topological effect has not been previously studied in this context. The topological effect works against, and dominates, the size effect in monopoly pricing by reducing the monopoly's capacity to extract consumer surplus. Under asymmetric information about consumer types, the monopoly prefers symmetric network topologies, but the social optimum is an asymmetric network.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3526.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:3526

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Keywords: social relations; networks; coordination; monopoly;

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