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Monopoly Pricing With Network Externalities Author info | Abstract | Publisher info | Download info | Related research | Statistics Luis Cabral (Universidade Nova de Lisboa and CEPR)
David Salant (GTE Laboratories Incorporated)
Glenn Woroch (GTE Laboratories)
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How should a monopolist price a durable good or a new technology that is subject to network externalities? In particular, should the monopolist set a low "introductory price" to attract a "critical mass" of adopters? In this paper, we provide intuition as to when and why introductory pricing might occur in the presence of network externalities. Incomplete information about demand or asymmetric information about costs are necessary for introductory pricing to occur in equilibrium.
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Paper provided by EconWPA in its series Industrial Organization with number
9411003.
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Date of creation: 23 Nov 1994Date of revision:
Handle: RePEc:wpa:wuwpio:9411003Note: 36?pp; postscript file, compressed; keywords: monopoly strategies, pricingContact details of provider: Web page: http://129.3.20.41
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Find related papers by JEL classification: L - Industrial Organization
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