Pricing in networks
This paper studies optimal pricing in networks in the presence of local consumption or price externalities. It analyzes the relation between prices and nodal centrality measures. Using an asymptotic approach, it shows that the ranking of optimal prices and strategies can be reduced to the lexicographic ranking of a specific vector of nodal characteristics. In particular, this result shows that with positive consumption externalities, prices are higher at nodes with higher degree, and with relative price externalities, prices are higher at nodes which have more neighbors of smaller degree.
|Date of creation:||Oct 2008|
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- Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006.
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- Sanjeev Goyal & Andrea Galeotti, 2007.
"A Theory of Strategic Diffusion,"
2007.70, Fondazione Eni Enrico Mattei.
- A. Banerji & Bhaskar Dutta, 2008.
"Local network externalities and market segmentation,"
Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers
08-13, Indian Statistical Institute, New Delhi, India.
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- Jullien, Bruno, 2000. "Competing in Network Industries: Divide and Conquer," IDEI Working Papers 112, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2001.
- Bramoulle, Yann & Kranton, Rachel, 2007. "Public goods in networks," Journal of Economic Theory, Elsevier, vol. 135(1), pages 478-494, July.
- de Marti, Joan & Zenou, Yves, 2009.
Working Paper Series
816, Research Institute of Industrial Economics.
- Andrea Galeotti & Sanjeev Goyal & Matthew O. Jackson & Fernando Vega-Redondo & Leeat Yariv, 2008.
Economics Working Papers
ECO2008/07, European University Institute.
- Andrea Galeotti, 2010. "Talking, Searching, And Pricing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1159-1174, November.
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