Competition or Predation? Schumpeterian Rivalry in Network Markets
AbstractWe explore the logic of predation and rules designed to prevent it in markets subject to network effects. Although, as many have informally argued, predatory behavior is plausibly more likely to succeed in such markets, we find that it is particularly hard to intervene in network markets in ways that improve welfare. We find that imposition of the leading proposals for rules against predatory pricing may lower or raise consumer welfare, depending on conditions that may be difficult to identify in practice.
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Bibliographic InfoPaper provided by Department of Economics, Institute for Business and Economic Research, UC Berkeley in its series Department of Economics, Working Paper Series with number qt5xw2d98g.
Date of creation: 04 Aug 2001
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predation; predatory behavior; network effects; price floors; competition;
Other versions of this item:
- Farrell, Joseph & Katz, Michael, 2001. "Competition or Predation? Schumpeterian Rivalry in Network Markets," Competition Policy Center, Working Paper Series qt6hs0v0pc, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Joseph Farrell and Michael L. Katz., 2001. "Competition or Predation? Schumpeterian Rivalry in Network Markets," Economics Working Papers E01-306, University of California at Berkeley.
- Joseph Farrell & Michael Katz, 2002. "Competition or Predation? Schumpeterian Rivalry in Network Markets," Industrial Organization 0201003, EconWPA.
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- D4 - Microeconomics - - Market Structure and Pricing
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qt0wx7c4zf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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