Comparative statics and centrality measures in oligopolies with interdependent preferences

Marco Boretto, Fausto Cavalli and Ahmad Naimzada

No 464, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: Considering the Cournot oligopoly with interdependent preferences proposed in [5], we analyze the effects of a change in the network of social interactions. Reconsidering some of the main centrality measures proposed in the literature, we show how intercentrality, Bonacich and Friedkin-Johnsen centrality measures can be related in a network described by a general matrix of interaction. This allows showing under what conditions a firm can benefit, in terms of equilibrium performance, from a change in the weight of interaction with respect to one of its competitors. Extending the approach to the study of a uniform change in the behavior of all the firms, we show that it is collectively beneficial only if the structure of social interaction is characterized by a sufficient degree of homogeneity in terms of weight distributions.

Keywords: Cournot Game; Preference interdependence; Network; Centrality measures; Comparative statics. (search for similar items in EconPapers)
JEL-codes: C62 C70 D43 (search for similar items in EconPapers)
Pages: 37
Date: 2021-03, Revised 2021-03
New Economics Papers: this item is included in nep-gth, nep-mic and nep-net
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