Pricing in information orchestrators and maximizing stable networks

Bernardo Lustosa, Alberto Albertin, Fernando Moreira

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

In innovation networks based on information exchange, an orchestrating actor, or hub, captures information from peripheral actors, promotes innovation and then distributes it to the network in the form of added value. This paper identifies the pricing options proposed by the orchestrating hub that would result in the network’s stability and efficiency. Since all the companies in this ecosystem can be seen as rational agents, game theory is an appropriate framework for studying pricing as a mechanism to promote network stability. We analyze the equilibrium conditions in this context and conclude that the Nash equilibrium entails the network’s stability. Our findings indicate that, in order to maximize the innovation power of the network, the agents should be charged a price proportional to the financial benefit obtained by the net innovation. This study fills relevant gaps in the literature on monopolistic orchestrated innovation and the pricing structures of network connections.
Original languageEnglish
JournalInternational Game Theory Review
Early online date26 Oct 2018
DOIs
Publication statusE-pub ahead of print - 26 Oct 2018

Keywords / Materials (for Non-textual outputs)

  • innovation networks
  • network stability
  • game theory
  • nash equilibrium
  • pricing

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