Welfare Analysis in Games with substitutabilities

Yann Rébillé and Lionel Richefort

Working Papers from HAL

Abstract: This paper investigates the social optimum in network games of strategic substitutes and identifies how network structure shapes optimal policies. First, we show that the socially optimal profile is ob-tained through a combination of two opposite network effects, generated by the incoming and the outgoing weighted Bonacich centrality measures. Next, three different policies that restore the social optimum are derived, and the implications of the predecessor(s)-successor(s) relationship between the agents on each policy instrument are explored. Then, the link between optimal taxes and the density of the network is established.

Keywords: spectral radius; network game; social optimum; Bonacich centrality; opti- mal policy; spectral radius. (search for similar items in EconPapers)
Date: 2012-09-17
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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