Book contents
- Frontmatter
- Contents
- Preface
- 1 Overview
- Part I Graph Theory and Social Networks
- Part II Game Theory
- Part III Markets and Strategic Interaction in Networks
- 10 Matching Markets
- 11 Network Models of Markets with Intermediaries
- 12 Bargaining and Power in Networks
- Part IV Information Networks and the World Wide Web
- Part V Network Dynamics: Population Models
- Part VI Network Dynamics: Structural Models
- Part VII Institutions and Aggregate Behavior
- Bibliography
- Index
12 - Bargaining and Power in Networks
from Part III - Markets and Strategic Interaction in Networks
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Preface
- 1 Overview
- Part I Graph Theory and Social Networks
- Part II Game Theory
- Part III Markets and Strategic Interaction in Networks
- 10 Matching Markets
- 11 Network Models of Markets with Intermediaries
- 12 Bargaining and Power in Networks
- Part IV Information Networks and the World Wide Web
- Part V Network Dynamics: Population Models
- Part VI Network Dynamics: Structural Models
- Part VII Institutions and Aggregate Behavior
- Bibliography
- Index
Summary
In our analysis of economic transactions on networks, particularly the model in Chapter 11, we considered how a node's position in a network affects its power in the market. In some cases, we were able to come up with precise predictions about prices and power, but in others the analysis left open a range of possibilities. For example, in the case of perfect competition between traders, we could conclude that the traders would make no profit, but it was not possible to say whether the resulting situation would favor particular buyers or sellers – different divisions of the available surplus were possible. This is an instance of a broader phenomenon that we discussed earlier, in Chapter 6: when there are multiple equilibria, some of which favor one player and some of which favor another, we may need to look for additional sources of information to predict how things will turn out.
In this chapter, we formulate a perspective on power in networks that can help us further refine our predictions for the outcomes of different participants. This perspective arises dominantly from research in sociology, and it addresses not just economic transactions but also a range of social interactions more generally that are mediated by networks. We will develop a set of formal principles that aim to capture some subtle distinctions in how a node's network position affects its power. The goal will be to create a succinct mathematical framework enabling predictions of which nodes have power, and how much power they have, for arbitrary networks.
- Type
- Chapter
- Information
- Networks, Crowds, and MarketsReasoning about a Highly Connected World, pp. 301 - 330Publisher: Cambridge University PressPrint publication year: 2010