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Pricing in networks

Author

Listed:
  • Francis Bloch

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

  • Nicolas Quérou

    (School of Management and Economics - QUB - Queen's University [Belfast])

Abstract

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.

Suggested Citation

  • Francis Bloch & Nicolas Quérou, 2008. "Pricing in networks," Working Papers hal-00356356, HAL.
    • Handle: RePEc:hal:wpaper:hal-00356356
    Note: View the original document on HAL open archive server: https://hal.science/hal-00356356
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    File URL: https://hal.science/hal-00356356/document
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Christian Ghiglino & Sanjeev Goyal, 2010. "Keeping Up with the Neighbors: Social Interaction in a Market Economy," Journal of the European Economic Association, MIT Press, vol. 8(1), pages 90-119, 03.
    2. Mohamed Belhaj & Frédéric Deroian, 2010. "Endogenous effort in communication networks under strategic complementarity," International Journal of Game Theory, Springer;Game Theory Society, vol. 39(3), pages 391-408, July.
    3. Heijnen, Pim & Soetevent, Adriaan R., 2018. "Price competition on graphs," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 161-179.
    4. Teteryatnikova, Mariya, 2008. "R&D in the network of international trade: Multilateral versus regional trade agreements," WTO Staff Working Papers ERSD-2009-03, World Trade Organization (WTO), Economic Research and Statistics Division.
    5. Kóczy Á., László, 2012. "Elméleti játékok, 2012. 8th Spain-Italy-Netherlands Meetings on Game Theory (SING8) [Theoretical Games 2012. The 8th Spain-Italy-Netherlands Meeting on Game Theory (SING8)]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1257-1261.

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    More about this item

    Keywords

    Social Networks; Network Externalities; Oligopolies; Réseaux sociaux; externalités de réseau; oligopoles;
    All these keywords.

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