IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Income Distribution in Network Markets

  • Corrado Benassi


    (Dipartimento di Scienze Economiche, Alma Mater Studiorum - Università di Bologna, Italy; The Rimini Centre for Economic Analysis, Italy)

  • Marcella Scrimitore


    (Dipartimento di Scienze dell’Economia, Università del Salento, Italy; The Rimini Centre for Economic Analysis, Italy)

We enquiry about the effects of first and second order stochastic dominance shifts of the distribution of the consumers’ willingness to pay, within the standard model of a market with network externalities and hump-shaped demand curve. This issue is analyzed in the polar cases of perfect competition and monopoly. We find that, while under perfect competition both types of distributional changes result in higher output, provided marginal costs are low enough, in the monopoly case the final outcome depends on the way income distribution and the network externality interact in determining market demand elasticity.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 13_13.

in new window

Date of creation: Jan 2013
Date of revision:
Handle: RePEc:rim:rimwps:13_13
Contact details of provider: Postal: Via Patara, 3, 47921 Rimini (RN)
Phone: +390541434142
Fax: +39054155431
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. P. Dogan, . "Vertical Networks, Integration, and Connectivity," Working Paper 33644, Harvard University OpenScholar.
  2. Irina Suleymanova & Christian Wey, 2008. "On the (Mis-) Alignment of Consumer and Social Welfare in Markets with Network Effects," Discussion Papers of DIW Berlin 794, DIW Berlin, German Institute for Economic Research.
  3. Kathleen Reavis Conner & Richard P. Rumelt, 1991. "Software Piracy: An Analysis of Protection Strategies," Management Science, INFORMS, vol. 37(2), pages 125-139, February.
  4. Kiiski, Sampsa & Pohjola, Matti, 2002. "Cross-country diffusion of the Internet," Information Economics and Policy, Elsevier, vol. 14(2), pages 297-310, June.
  5. Majumder, Amita & Chakravarty, Satya Ranjan, 1990. "Distribution of Personal Income: Development of a New Model and Its Application to U.S. Income Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(2), pages 189-96, April-Jun.
  6. Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier.
  7. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer, vol. 38(2), pages 119-149, March.
  8. Mocnik, Dijana & Sirec, Karin, 2010. "The determinants of Internet use controlling for income level: Cross-country empirical evidence," Information Economics and Policy, Elsevier, vol. 22(3), pages 243-256, July.
  9. Luis Cabral, 2007. "Dynamic Price Competition with Network Effects," 2007 Meeting Papers 326, Society for Economic Dynamics.
  10. Nicholas Economides, 1997. "The Economics of Networks," Industrial Organization 9701002, EconWPA.
  11. Menzie D. Chinn & Robert W. Fairlie, 2006. "ICT Use in the Developing World: An Analysis of Differences in Computer and Internet Penetration," NBER Working Papers 12382, National Bureau of Economic Research, Inc.
  12. Corrado Benassi & Alessandra Chirco & Marcella Scrimitore, 2002. "Income concentration and market demand," Oxford Economic Papers, Oxford University Press, vol. 54(4), pages 584-596, October.
  13. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
  14. Jong-Hee Hahn, 2001. "The Welfare Effect of Quality Degradation in the Presence of Network Externalities," Keele Department of Economics Discussion Papers (1995-2001) 2001/08, Department of Economics, Keele University, revised Feb 2003.
  15. Swann, G. M. Peter, 2002. "The functional form of network effects," Information Economics and Policy, Elsevier, vol. 14(3), pages 417-429, September.
  16. Nicholas Economides, 1997. "Network Externalities, Complementarities, and Invitations to Enter," Industrial Organization 9701004, EconWPA.
  17. Luca Lambertini & Raimondello Orsini, 2001. "Network Externalities and the Overprovision of Quality by a Monopolist," Southern Economic Journal, Southern Economic Association, vol. 67(4), pages 969-982, April.
  18. Corrado Benassi & Alessandra Chirco, 2004. "Income Distribution, Price Elasticity and the 'Robinson Effect'," Manchester School, University of Manchester, vol. 72(5), pages 591-600, 09.
  19. Esteban, Joan M, 1986. "Income-Share Elasticity and the Size Distribution of Income," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 439-44, June.
  20. Reto Foellmi & Josef Zweimuller, 2006. "Income Distribution and Demand-Induced Innovations," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 941-960.
  21. Ari Hyytinen & Otto Toivanen, 2011. "Income Inequality and Technology Diffusion: Evidence from Developing Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 364-387, 06.
  22. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
  23. David Cuberes & Luis Andrés & Tomás Serebrisky & Mame Astou Diouf, 2010. "The diffusion of Internet: a cross-country analysis," Working Papers. Serie AD 2010-07, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  24. Makoto Yano & Fumio Dei, 2006. "Network externalities, discrete demand shifts, and submarginal-cost pricing," Canadian Journal of Economics, Canadian Economics Association, vol. 39(2), pages 455-476, May.
  25. Luis Cabral & David Salant & Glenn Woroch, 1994. "Monopoly Pricing With Network Externalities," Industrial Organization 9411003, EconWPA.
  26. Maria Alipranti & Emmanuel Petrakis, 2012. "Comparative Advertising in Markets with Network Externalities," Working Papers 1306, University of Crete, Department of Economics, revised 08 May 2013.
  27. Corrado Benassi & Alessandra Chirco, 2006. "Income Share Elasticity and Stochastic Dominance," Social Choice and Welfare, Springer, vol. 26(3), pages 511-525, June.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:rim:rimwps:13_13. 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: (Dimitrios Vortelinos)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.