10.17615/jdw2-rn54

Competition in Markets with Network Externalities

Abstract

This paper analyzes the effects of network externalities on an incumbent's advantage in a duopoly models where an entrant and an incumbent strategically set prices. A Global Games approach is used as an equilibrium refinement, where consumers receive both a public and a private signal about the entrant's quality. While a unique equilibrium is not guaranteed in all of the cases, the incumbent's advantage arises in specific cases depending on the relative precision of the signals. As an extension, I show in a model of endogenous advertisement choice that the multiple equilibria problem is resolved because the entrant prefers an advertisement level which makes the private signal precise enough to generate a unique equilibrium.Doctor of Philosoph

Similar works

This paper was published in Carolina Digital Repository.

Having an issue?

Is data on this page outdated, violates copyrights or anything else? Report the problem now and we will take corresponding actions after reviewing your request.