IDEAS home Printed from https://ideas.repec.org/p/dpr/wpaper/0884r.html
   My bibliography  Save this paper

Bertrand Competition under Network Externalities

Author

Listed:
  • Masaki Aoyagi

Abstract

Two sellers engage in price competition to attract buyers located on a network. The value of the good of either seller to any buyer depends on the number of neighbors on the network who consume the same good. For a generic specification of consumption externalities, we show that an equilibrium price equals the marginal cost if and only if the buyer network is complete or cyclic. When the externalities are approximately linear in the size of consumption, we identify the classes of networks in which one of the sellers monopolizes the market, or the two sellers segment the market.

Suggested Citation

  • Masaki Aoyagi, 2013. "Bertrand Competition under Network Externalities," ISER Discussion Paper 0884r, Institute of Social and Economic Research, Osaka University, revised May 2014.
  • Handle: RePEc:dpr:wpaper:0884r
    as

    Download full text from publisher

    File URL: http://www.iser.osaka-u.ac.jp/library/dp/2013/DP0884R.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Seidman, Stephen B., 1983. "LS sets as cohesive subsets of graphs and hypergraphs," Mathematical Social Sciences, Elsevier, vol. 6(1), pages 87-91, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Ying-Ju & Zenou, Yves & Zhou, Junjie, 2015. "Competitive pricing strategies in social networks," CEPR Discussion Papers 10857, C.E.P.R. Discussion Papers.
    2. Sanjeev Goyal, 2015. "Networks in Economics: A Perspective on the Literature," Cambridge Working Papers in Economics 1548, Faculty of Economics, University of Cambridge.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dpr:wpaper:0884r. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fumiko Matsumoto). General contact details of provider: http://edirc.repec.org/data/isosujp.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.