Trading Information Goods on a Network: An Experiment

We experimentally examine the impact of a cycle path on the trading of a copyable information good in networks. A cycle path in a network permits a buyer to become a reseller that can compete against existing sellers by replicating the good. Theory predicts that the price of the information good, even with the first transaction where there is not yet a reseller competing with the original seller, will be lower in networks with a cycle path than otherwise. However, our experiment reveals that the observed price for the first transaction is significantly higher in networks with a cycle path.

Keywords: Information Good, Network

JEL Classification: D42, L14

Suggested Citation: Suggested Citation

Hanaki, Nobuyuki and Kayaba, Yutaka and Maekawa, Jun and Matsushima, Hitoshi, Trading Information Goods on a Network: An Experiment (December 1, 2021). ISER DP No. 1151, Available at SSRN: https://ssrn.com/abstract=3975962 or http://dx.doi.org/10.2139/ssrn.3975962