Welfare Implications of Price Competition in Product Variety Networks

The paperwork examines the impact of the network market structure on public welfare. Today, amongst all the variety of products produced by companies, it is important to understand how much to produce, how to set the price for a particular product, whether this price is too high or below the social optimum of consumption of these products, and finally, what variety of products meets consumer demand. The impact of the network structure on public welfare is ambiguous and has differences in market conditions, in particular, differences in the severity of price competition can have a significant impact on economic growth and the well-being of the population. In the era of modern market economy, manufacturers are increasingly focused on consumers, so many firms have become aware of the importance of consumer preferences. In turn, modern buyers tend to buy a product with the utility for themselves. For example, buying your "favorite" product while minimizing transaction costs and maximizing the benefits of purchasing your preferred product. This work is aimed at investigating the existing model of partial equilibrium in conditions of imperfect competition in order to identify the dependence of consumer demand, firm profit and social welfare for various graph structures describing a certain type of competition, as well as to consider approaches to modeling firm competition and product differentiation.