Pricing in social networks

Francis Bloch and Nicolas Querou

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

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 consumers' 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)
Date: 2013-07
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Citations: View citations in EconPapers (109)

Published in Games and Economic Behavior, 2013, 80 (1), pp.243-261. ⟨10.1016/j.geb.2013.03.006⟩

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Journal Article: 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:hal:cesptp:hal-01013603

DOI: 10.1016/j.geb.2013.03.006

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