Trading Information Goods on a Network: An Experiment
ISER DP No. 1151
76 Pages Posted: 6 Dec 2021
Date Written: December 1, 2021
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