Two Experiments on Trading Information Goods in a Network

We examine the impact of a cycle path on the trading of a copyable information good in a network experimentally. A cycle path in a network allows a buyer to become a reseller who can compete against existing sellers by replicating the good. A theoretical prediction considers 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. An additional experiment that enhances competition also does not support the theoretical prediction.

Keywords: Information Good, Network

JEL Classification: D42, L14

Suggested Citation: Suggested Citation

Hanaki, Nobuyuki and Kayaba, Yutaka and Maekawa, Jun and Matsushima, Hitoshi, Two Experiments on Trading Information Goods in a Network (October 3, 2023). ISER DP No. 1151R, Available at SSRN: https://ssrn.com/abstract=3975962 or http://dx.doi.org/10.2139/ssrn.3975962