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Bottleneck links, essential intermediaries and competing paths of diffusion in networks

Author

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  • Manea, Mihai

    (Department of Economics, Stony Brook University)

Abstract

We investigate how information goods are priced and diffused over links in a network. A new equivalence relation between nodes captures the effects of network architecture and locations of sellers on the division of profits and characterizes the topology of competing (and potentially overlapping) diffusion paths. Sellers indirectly appropriate profits over intermediation chains from buyers in their equivalence classes. Links within the same class constitute bottlenecks for information diffusion and confer monopoly power. Links bridging distinct classes are redundant for diffusion and generate competition among sellers. In dense networks, competition limits the scope of indirect appropriability, and intellectual property rights foster innovation.

Suggested Citation

  • Manea, Mihai, 2021. "Bottleneck links, essential intermediaries and competing paths of diffusion in networks," Theoretical Economics, Econometric Society, vol. 16(3), July.
    • Handle: RePEc:the:publsh:4385
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    File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20211017/31453/906
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    Citations

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    Cited by:

    1. Nobuyuki Hanaki & Yutaka Kayaba & Jun Maekawa & Hitoshi Matsushima, 2021. "Trading information goods on a network: An experiment," ISER Discussion Paper 1151, Institute of Social and Economic Research, Osaka University.
    2. Ana Mauleon & Simon Schopohl & Akylai Taalaibekova & Vincent Vannetelbosch, 2022. "Coordination on networks with farsighted and myopic agents," International Journal of Game Theory, Springer;Game Theory Society, vol. 51(3), pages 509-536, November.
    3. 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.
    4. Bochet, Olivier & Faure, Mathieu & Long, Yan & Zenou, Yves, 2020. "Perceived Competition in Networks," CEPR Discussion Papers 15582, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Networks; diffusion; indirect appropriability; captive markets; intermediation; competition; bottlenecks; redundant links; information goods; copying; intellectual property;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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