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Indirect Network Effects and Trade Patterns

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  • Toru Kikuchi

    ()
    (Kobe University)

  • Kazumichi Iwasa

    ()
    (Kobe University)

Abstract

Indirect network effects exist when the utility of consumers is increasing in the variety of complementary products available for use with an electronic hardware device. In this note, we examine how indirect network effects work as a determinant of trade patterns. For these purposes we construct a simple two-country model of trade with incompatible country-specific hardware technologies. We show that trade patterns are determined by the interaction between hardware differentiation and indirect network effects due to software availability.

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File URL: http://www.accessecon.com/pubs/EB/2007/Volume6/EB-07F10012A.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 6 (2007)
Issue (Month): 24 ()
Pages: 1-9

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Handle: RePEc:ebl:ecbull:eb-07f10012

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  1. Gandal, Neil & Shy, Oz, 2001. "Standardization policy and international trade," Journal of International Economics, Elsevier, vol. 53(2), pages 363-383, April.
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Cited by:
  1. Vincent Vannetelbosch & Cecilia Vergari & Ana Mauleon, 2008. "Market integration in network industries," Economics Bulletin, AccessEcon, vol. 12(25), pages 1-7.

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