The Value of Network Information: Assortative Mixing Makes the Difference

Mohamed Belhaj () and Frédéric Deroïan ()

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Abstract: We study the value of network information in a context of monopoly pricing in the presence of local network externalities. We compare a setting in which all players, i.e. the monopoly and consumers, know the network structure and consumers' private preferences with a setting in which players only know the joint distribution of preferences, in-degrees and out-degrees. We give conditions under which network information increases profit or/and consumer surplus. The analysis reveals the crucial role played by four properties: degree assortativity, homophily (in preferences), preference-degree assortativity and preference-Bonacich centrality assortativity.

Keywords: monopoly; network effects; price discrimination; Bonacich centrality; network information; degree assortativity; homophily; preference-degree assortativity; preference-Bonacich centrality assortativity (search for similar items in EconPapers)
Date: 2016-05
New Economics Papers: this item is included in nep-gth, nep-mic and nep-net
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01314954v1
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The value of network information: Assortative mixing makes the difference (2021)
Working Paper: The Value of Network Information: Assortative Mixing Makes the Difference (2016)
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