This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Vertical Product Differentiation, Network Externalities, and Compatibility Decisions

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Anette Boom ()
Pio Baake

Additional information is available for the following registered author(s):

Abstract

We analyse the subgame perfect equilibrium of a four stage game in a model of vertical product differentiation, where the consumer's evaluation of a product depends on its inherent quality and on its network's size. First, two firms choose their product's inherent quality. Then they may mutually agree on providing an adapter before competing in prices. Finally, consumers buy. We find that, despite the high quality firm's preference for incompatibility, an adapter is always provided in equilibrium. Social welfare is greater than without an adapter and can be improved by regulating compatibility only in those cases where qualities are differentiated too much.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://userpage.fu-berlin.de/%7Elsbester/papers/ana19.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Departmental Working Papers in its series Papers with number 010.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length:
Date of creation:
Date of revision:
Handle: RePEc:bef:lsbest:010

Contact details of provider:

For technical questions regarding this item, or to correct its listing, contact: (XXX).

Related research
Keywords:

Other versions of this item:

Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Nicholas Economides & Fredrick Flyer, 1997. "Compatibility and Market Structure for Network Goods," Working Papers 98-02, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
  2. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  3. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June. [Downloadable!] (restricted)
  4. Belleflamme, Paul, 1998. "Adoption of network technologies in oligopolies," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 415-444, July. [Downloadable!] (restricted)
  5. Navon, Ami & Shy, Oz & Thisse, Jacques-François, 1995. "Product Differentiation in the Presence of Positive and Negative Network Effects," CEPR Discussion Papers 1306, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Baake, Pio & Boom, Anette, 2001. "Vertical product differentiation, network externalities, and compatibility decisions," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 267-284, January. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Klaus Conrad, . "Network effects, Compatibility and the Environment: The Case of Hydrogen Powered Cars," IVS discussion paper series 613, Institut für Volkswirtschaft und Statistik (IVS), University of Mannheim. [Downloadable!]
  2. Anette Boom & Pio Baake, . "Vertical Product Differentiation, Network Externalities, and Compatibility Decisions," Papers 010, Departmental Working Papers. [Downloadable!]
    Other versions:
  3. Amihai Glazer & Hiroki Kondo, 2007. "Innovation and Imitation Across Jurisdictions," Working Papers 070807, University of California-Irvine, Department of Economics. [Downloadable!]
  4. Jean J., GABSWEWICZ & Filomena, GARCIA, 2005. "Quality improvement and network externalities," Université catholique de Louvain, Département des Sciences Economiques Working Paper 2005064, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
  5. Fabio M. Manenti & Ernesto Somma, 2002. "One-Way Compatibility, Two-Way Compatibility and Entry in Network Industries," Industrial Organization 0205001, EconWPA, revised 04 Oct 2002. [Downloadable!]
    Other versions:
  6. Hend Ghazzai & Rim Lahmandi-Ayed, 2006. "Vertical differentiation, network externalities and compatibility decisions : an alternative approach," Cahiers de la Maison des Sciences Economiques b06013, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  7. Ralph C Bayer & Mickey Chan, 2004. "Network Externalities, Demand Inertia and Dynamic Pricing in an Experimental Oligopoly Market," Experimental 0412004, EconWPA. [Downloadable!]
    Other versions:
  8. Sääskilahti, Pekka, 2006. "Buying Decision Coordination and Monopoly Pricing of Network Goods," MPRA Paper 5106, University Library of Munich, Germany. [Downloadable!]
  9. Rossella Argenziano, 2007. "Differentiated Networks: Equilibrium and Efficiency," Economics Discussion Papers 638, University of Essex, Department of Economics. [Downloadable!]
  10. L. Colombo, 2003. "Quality of service in the Congestible Internet: a Differential Game with Capacity Investments," Working Papers 485, Dipartimento Scienze Economiche, Università di Bologna. [Downloadable!]
Statistics
Access and download statistics

Did you know? IDEAS was launched in September 1997.

This page was last updated on 2008-7-16.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.