Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92595
Authors: 
Aoyagi, Masaki
Year of Publication: 
2013
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 884
Abstract: 
Two sellers engage in price competition to attract buyers located on a network. The value of the good of either seller to any buyer depends on the number of neighbors on the network who consume the same good. For a generic specification of consumption externalities, we show that an equilibrium price equals the marginal cost if and only if the buyer network is complete or cyclic. When the externalities are approximately linear in the size of consumption, we identify the classes of networks in which one of the sellers monopolizes the market, or the two sellers segment the market.
Subjects: 
graphs
networks
externalities
Bertrand
divide and conquer
discriminatory pricing
monopolization
segmentation
JEL: 
C72
D82
Document Type: 
Working Paper

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