Non-monotonic network effects and market entry

Alexander Lundberg

doi:10.1016/j.econlet.2015.10.039

Non-monotonic network effects and market entry

Alexander Lundberg^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

The simple circular model of horizontal product differentiation, in which firms compete in price, is characterized by excessive firm entry in equilibrium. When non-monotonic network effects are present, this result no longer holds. If consumers differ in their optimal number of other consumers choosing their same good, entry in equilibrium can be insufficient.

Original language	English (US)
Pages (from-to)	146-149
Number of pages	4
Journal	Economics Letters
Volume	137
DOIs	https://doi.org/10.1016/j.econlet.2015.10.039
State	Published - Dec 1 2015
Externally published	Yes

Keywords

Fixed costs
Free entry
Network effects
Non-monotonicity
Product differentiation

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.econlet.2015.10.039

Cite this

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title = "Non-monotonic network effects and market entry",

abstract = "The simple circular model of horizontal product differentiation, in which firms compete in price, is characterized by excessive firm entry in equilibrium. When non-monotonic network effects are present, this result no longer holds. If consumers differ in their optimal number of other consumers choosing their same good, entry in equilibrium can be insufficient.",

keywords = "Fixed costs, Free entry, Network effects, Non-monotonicity, Product differentiation",

author = "Alexander Lundberg",

note = "Publisher Copyright: {\textcopyright} 2015 Elsevier B.V.",

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AB - The simple circular model of horizontal product differentiation, in which firms compete in price, is characterized by excessive firm entry in equilibrium. When non-monotonic network effects are present, this result no longer holds. If consumers differ in their optimal number of other consumers choosing their same good, entry in equilibrium can be insufficient.

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KW - Network effects

KW - Non-monotonicity

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JO - Economics Letters

JF - Economics Letters

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Non-monotonic network effects and market entry

Abstract

Keywords

ASJC Scopus subject areas

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