Price Regulation and Network Spillovers

Chengqing Li and Junjie Zhou

Papers from arXiv.org

Abstract: We study price regulation for a monopolist operating in networked markets with demand spillovers. Achieving efficiency requires price reductions proportional to consumers' Katz-Bonacich centralities, which generally cannot be implemented by commonly used price regulations. Moreover, these regulations become asymptotically welfare neutral as spillovers grow. Nevertheless, some price regulations may still benefit consumers. In particular, average-price regulation robustly increases consumer surplus. By contrast, banning price discrimination increases consumer surplus only when more central consumers have higher intrinsic willingness to pay.

Date: 2025-08, Revised 2026-03
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic, nep-net and nep-reg
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