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Prices in Networks

Hi-Lin Tan

MPRA Paper from University Library of Munich, Germany

Abstract: When there is strategic complementarity of consumption between neighbors in a social network, we find that certain consumers may have a bigger impact than other consumers on the market demand and therefore the equilibrium price. The influence that a particular consumer has on the market demand depends on the network structure and the consumer’s location in the network. This analysis may, for example, shed light on the segment of consumers that should be the target of selective advertisements or promotions.

Keywords: Walrasian Equilibrium; Strategic Complementarity; Networks (search for similar items in EconPapers)
JEL-codes: C72 D11 D41 D51 Z13 (search for similar items in EconPapers)
Date: 2006-09-27
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