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Two experiments on trading information goods in a network

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  • Hanaki, Nobuyuki
  • Kayaba, Yutaka
  • Maekawa, Jun
  • Matsushima, Hitoshi

Abstract

We examine the impact of a cycle path on the trading of a copyable information good in a network experimentally. A cycle path in a network allows a buyer to become a reseller who can compete against existing sellers by replicating the good. A theoretical prediction considers that the price of the information good, even with the first transaction where there is not yet a reseller competing with the original seller, will be lower in networks with a cycle path than otherwise. However, our experiment reveals that the observed price for the first transaction is significantly higher in networks with a cycle path. An additional experiment that enhances competition also does not support the theoretical prediction.

Suggested Citation

  • Hanaki, Nobuyuki & Kayaba, Yutaka & Maekawa, Jun & Matsushima, Hitoshi, 2024. "Two experiments on trading information goods in a network," Games and Economic Behavior, Elsevier, vol. 145(C), pages 1-18.
    • Handle: RePEc:eee:gamebe:v:145:y:2024:i:c:p:1-18
    DOI: 10.1016/j.geb.2024.02.002
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    More about this item

    Keywords

    Information good; Network;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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