The Value of Network Information: Assortative Mixing Makes the Difference

Mohamed Belhaj (1) , Frédéric Deroïan (1)

1 GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille

We study the value of network information in a context of monopoly pricing in the presence of local network externalities. We compare a setting in which all players, i.e. the monopoly and consumers, know the network structure and consumers' private preferences with a setting in which players only know the joint distribution of preferences, in-degrees and out-degrees. We give conditions under which network information increases profit or/and consumer surplus. The analysis reveals the crucial role played by four properties: degree assortativity, homophily (in preferences), preference-degree assortativity and preference-Bonacich centrality assortativity.

Mots clés: monopoly; network effects; price discrimination; Bonacich centrality; network information; degree assortativity; homophily; preference-degree assortativity; preference-Bonacich centrality assortativity

Domaines: Economies et finances

Mohamed Belhaj, Frédéric Deroïan. The Value of Network Information: Assortative Mixing Makes the Difference. 2016. ⟨halshs-01314954⟩