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.
|Journal||International Game Theory Review|
|Early online date||26 Oct 2018|
|Publication status||E-pub ahead of print - 26 Oct 2018|
- innovation networks
- network stability
- game theory
- nash equilibrium