Prices in Networks

Tan, Hi-Lin (2006): Prices in Networks.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Walrasian Equilibrium; Strategic Complementarity; Networks
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D41 - Perfect Competition; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

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