Screening contracts in the presence of positive network effects
AbstractBased on the critical assumption of strategic complementarity, this paper builds a general model to describe and solve the screening problem faced by the monopolist seller of a network good. By applying monotone comparative static tools, we demonstrate that the joint presence of asymmetric information and positive network effects leads to a strict downward distortion for all consumers in the quantities provided. We also show that the equilibrium allocation is an increasing function of the intensity of network effects, and that a discriminating monopoly may supply larger quantities for all consumers than a competitive industry
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 26 (2008)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/inca/505551
Other versions of this item:
- Gergely Csorba, 2004. "Screening Contracts in the Presence of Positive Network Effects," IEHAS Discussion Papers 0414, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- Gergely Csorba, 2004. "Screening Contracts in the Presence of Positive Network Effects," Econometric Society 2004 North American Summer Meetings 336, Econometric Society.
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
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