Working papers

When Do Markets Work? Multiplex Networks and Efficiency 

with Yves Zenou, Junjie Zhou [Latest version]

Last update: May 2026

We study an Arrow-Debreu economy with externalities generated by multiplex networks. Market equilibrium prices reflect both the preferences and scarcity of goods, consumers' network centralities arising from goods' externalities, as well as linkages across goods (layers) through the budget constraint. Despite the presence of externalities, competitive markets can still be efficient: the First and Second Welfare Theorems hold if either all networks are regular or all layers share the same network structure. When markets allocate goods inefficiently, a Lindahl equilibrium-implemented through personalized prices-can restore efficiency, but may leave some consumers worse off.

Price Regulation and Network Spillovers 

with Junjie Zhou, [Latest version]

Last update: January 2026

We study price regulation for a monopolist operating in networked markets with demand spillovers. Achieving efficiency requires price reductions proportional to consumers’ Katz–Bonacich centralities, which generally cannot be implemented by commonly used price regulations. Moreover, these regulations become asymptotically welfare neutral as spillovers grow. Nevertheless, some price regulations may still benefit consumers. In particular, average-price regulation robustly increases consumer surplus. By contrast, banning price discrimination increases consumer surplus only when more central consumers have higher intrinsic willingness to pay.