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Price Setting on a Network
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DOI：10.1111/1756-2171.70035.png)
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Abstract
En 中文
I study price setting within a network of interconnected monopolists. Some firms possess stronger commitment or bargaining power than others, enabling them to influence the pricing decisions of other firms. Although it is well-understood that multiple marginalization reduces both total profits and social welfare, I show that strategic interactions within the network exacerbate the marginalization problem. Individual profits are proportional to a new measure of network centrality, defined by the equilibrium characterization. The results underscore the importance of network structure in policy considerations, such as mergers or trade policies.
Keywords:
price setting
network centrality
sequential games
multiple-marginalization
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