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Theory seminar presented by Toomas Hinnosaar (Collegio Carlo Alberto)
10 December 2019, 12:00 pm–1:45 pm
Price Setting on a Network
Event Information
Open to
- All
Organiser
-
Nikita Roketskiy
Location
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LG10056: Bentham House4-8 Endsleigh GardensLondonWC1H 0EGUnited Kingdom
Abstract:
Most products are produced and sold by supply chain networks, where an interconnected network of producers and intermediaries set prices to maximize their profits. I show that there exists a unique equilibrium in a price-setting game on a network. The key distortion reducing both total profits and social welfare is multiple-marginalization, which is magnified by strategic interactions. Individual profits are proportional to influentiality, which is a new measure of network centrality defined by the equilibrium characterization. The results emphasize the importance of the network structure when considering policy questions such as mergers or trade tariffs.
Paper available
About the Speaker
Toomas Hinnosaar
at Collegio Carlo Alberto