Advanced Search
MyIDEAS: Login

Equilibrium Size in Network with Indirect Network Externalities

Contents:

Author Info

  • Laura BARALDI

Abstract

I present a simple model of determination of the equilibrium size of a network with indirect network externalities. Indirect network externalities can generate complementarity between goods, and then the demand functions for the network good are those of the complementary goods: the result in the determination of the equilibrium size in a market with indirect network externalities is the "classical" result with complementary goods. I calculate the number of consumers of each group that should be optimal for firms in different market structures, as perfect competition, monopoly and duopoly. The result is that the equilibrium size of the network with indirect network externalities depends on the market structure; it is wider in perfect competition than in monopoly and duopoly; because of the externalities, perfect competition is inefficient, that is, the equilibrium size in this market structure is smaller than the equilibrium size chosen by a social planner; prices charged in a duopolistic market with indirect network externalities are greater than prices charged in a monopoly market, and then, the equilibrium size in duopoly is smaller than in monopoly; this is the classical result that we obtain with complementary goods, generated by the indirect network externalities, and it is different from the result in markets with direct network externalities in wich the equilibrium size in duopoly is greater than monopoly because the competition with substitute goods

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.mulino.it/rivisteweb/scheda_articolo.php?id_articolo=19765
Download Restriction: download restricted to subscribers, see http://www.mulino.it for details

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by SIE - Societa' Italiana degli Economisti (I) in its journal Rivista Italiana degli Economisti.

Volume (Year): 9 (2004)
Issue (Month): 3 (December)
Pages: 475-494

as in new window
Handle: RePEc:rie:review:v:9:y:2004:i:3:n:5

Contact details of provider:
Postal: Piazzale Martelli, 8, 60121 Ancona (Italy)
Email:
Web page: http://www.siecon.org
More information through EDIRC

Order Information:
Web: http://www.mulino.it/edizioni/riviste/scheda_rivista.php?issn=1593-8662

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Roberto Roson, 2006. "Equilibrium Size in Network with Indirect Network Externalities: a Comment," Working Papers 2006_17, Department of Economics, University of Venice "Ca' Foscari".
  2. Baraldi, A. Laura, 2008. "Network Externalities and Critical Mass in the Mobile Telephone Network: a Panel Data Estimation," MPRA Paper 13373, University Library of Munich, Germany.
  3. Laura Rinaldi, 2008. "Estimation of network externalities and critical mass in the mobile telephone market: a panel data analysis of the OECD countries," Working Papers 1_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:rie:review:v:9:y:2004:i:3:n:5. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SIE).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.