Pricing in social networks

Francis Bloch and Nicolas Querou

Games and Economic Behavior, 2013, vol. 80, issue C, 243-261

Abstract: We analyze the problem of optimal monopoly pricing in social networks where agents care about consumption or prices of their neighbors. We characterize the relation between optimal prices and consumersʼ centrality in the social network. This relation depends on the market structure (monopoly vs. oligopoly) and on the type of externalities (consumption versus price). We identify two situations where the monopolist does not discriminate across nodes in the network (linear monopoly with consumption externalities and local monopolies with price externalities). We also analyze the robustness of the analysis with respect to changes in demand, and the introduction of bargaining between the monopolist and the consumer.

Keywords: Social networks; Monopoly pricing; Network externalities; Reference price; Centrality measures (search for similar items in EconPapers)
JEL-codes: C69 D43 D85 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (115)

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Working Paper: Pricing in social networks (2013)
Working Paper: Pricing in social networks (2013)
Working Paper: Pricing in social networks (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:80:y:2013:i:c:p:243-261

DOI: 10.1016/j.geb.2013.03.006

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