The value of network information: Assortative mixing makes the difference

Mohamed Belhaj (1) , Frédéric Deroïan (1)

1 AMSE - Aix-Marseille Sciences Economiques

A monopoly sells a network good to a large population of consumers. We explore how the monopoly's profit and the consumer surplus vary with the arrival of public information about the network structure. The analysis reveals that, under homogeneous preferences for the good, degree assortativity ensures that information arrival increases both profit and consumer surplus. In contrast, heterogeneous preferences for the good can create a tension between consumer surplus and profit.

Keywords: monopoly; network effects; network information; Bonacich centrality; degree assortativity; assortative mixing

Domains: Humanities and Social Sciences; Economics and Finance

Mohamed Belhaj, Frédéric Deroïan. The value of network information: Assortative mixing makes the difference. Games and Economic Behavior, 2021, 126, pp.428-442. ⟨10.1016/j.geb.2020.12.008⟩. ⟨hal-03160602⟩