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Market size effects on long-run demand of a network good

Author

Listed:
  • Dai Zusai

    (Department of Economics, Temple University)

Abstract

We consider optimal dynamic pricing under a network externality. We construct the demand dynamic of the network good from the aggregate best response dynamic of agents who have different adoption costs. When the distribution of adoption costs is convex, expansion of potential market inevitably enlarges long-run demand.

Suggested Citation

  • Dai Zusai, 2015. "Market size effects on long-run demand of a network good," Economics Bulletin, AccessEcon, vol. 35(4), pages 2768-2775.
    • Handle: RePEc:ebl:ecbull:eb-14-00436
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I4-P276.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    entry game; platform; dynamic optimization; network externality; size effects; non-concavity;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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