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The Value of Network Information

Fainmesser, Itay P and Galeotti, Andrea (2013) The Value of Network Information. [UNSPECIFIED]


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The business model of companies such as Facebook, MySpace, and Twitter, relies on monetizing the information on the interactions and influences of their users. How valuable is such information, and is its use beneficial or detrimental for consumer welfare? We study these questions in a model where a monopoly sells a network good and may price discriminate using network information: information on consumers influences and/or on consumers susceptibilities to influence. Our framework incorporates a rich set of market products, including goods characterized by global and local network effects. We derive results on the value of network information and determine under which conditions, relative to uniform price, consumer surplus increases. We demonstrate the applicability of our framework using survey data on various types of relationships.

Uncontrolled Keywords: HB;
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Users 161 not found.
Date Deposited: 04 Apr 2014 15:10
Last Modified: 17 Aug 2017 17:53

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