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The reflection problem in network effect estimation

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  • Marc Rysman

Abstract

This paper discusses the empirical identification of network effects in light of the reflection problem of Manski. I argue that models of indirect network effects present reasonable exclusion restrictions to address the challenges of the reflection problem.

Suggested Citation

  • Marc Rysman, 2019. "The reflection problem in network effect estimation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 153-158, January.
    • Handle: RePEc:bla:jemstr:v:28:y:2019:i:1:p:153-158
    DOI: 10.1111/jems.12301
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    References listed on IDEAS

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    1. Matthew T. Clements & Hiroshi Ohashi, 2005. "Indirect Network Effects And The Product Cycle: Video Games In The U.S., 1994–2002," Journal of Industrial Economics, Wiley Blackwell, vol. 53(4), pages 515-542, December.
    2. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters, in: The Economics of New Goods, pages 207-248, National Bureau of Economic Research, Inc.
    3. Marc Rysman & Gautam Gowrisankaran & Minsoo Park, 2011. "Measuring Network Effects in a Dynamic Environment," Boston University - Department of Economics - Working Papers Series WP2011-061, Boston University - Department of Economics.
    4. Gautam Gowrisankaran & Joanna Stavins, 2004. "Network Externalities and Technology Adoption: Lessons from Electronic Payments," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 260-276, Summer.
    5. Neil Gandal & Michael Kende & Rafael Rob, 2000. "The Dynamics of Technological Adoption in Hardware/Software Systems: The Case of Compact Disc Players," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 43-61, Spring.
    6. Robin S. Lee, 2013. "Vertical Integration and Exclusivity in Platform and Two-Sided Markets," American Economic Review, American Economic Association, vol. 103(7), pages 2960-3000, December.
    7. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 531-542.
    8. Ying Fan, 2013. "Ownership Consolidation and Product Characteristics: A Study of the US Daily Newspaper Market," American Economic Review, American Economic Association, vol. 103(5), pages 1598-1628, August.
    9. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1, March.
    10. Pradeep K. Chintagunta & Harikesh S. Nair & R. Sukumar, 2009. "Measuring marketing‐mix effects in the 32/64 bit video‐game console market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(3), pages 421-445, April.
    11. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 483-512.
    12. Angrist, Joshua D., 2014. "The perils of peer effects," Labour Economics, Elsevier, vol. 30(C), pages 98-108.
    13. Catherine Tucker, 2008. "Identifying Formal and Informal Influence in Technology Adoption with Network Externalities," Management Science, INFORMS, vol. 54(12), pages 2024-2038, December.
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    Cited by:

    1. Jullien, Bruno & Sand-Zantman, Wilfried, 2021. "The Economics of Platforms: A Theory Guide for Competition Policy," Information Economics and Policy, Elsevier, vol. 54(C).
    2. Cascino, Stefano & Daske, Holger & Defond, Mark & Florou, Annita & Gassen, Joachim & Hung, Mingyi, 2023. "Reflections on the 20-year anniversary of worldwide IFRS adoption," LSE Research Online Documents on Economics 120205, London School of Economics and Political Science, LSE Library.
    3. Che, Yuyuan & Feng, Hongli & Hennessy, David, 2021. "Assessing Peer Effects and Subsidy Impacts in Technology Adoption: Application to Grazing Management Choices with Farm Survey Data," 2021 Conference, August 17-31, 2021, Virtual 315123, International Association of Agricultural Economists.
    4. Julian Hidalgo & Michelle Sovinsky, 2023. "Internet (Power) to the People: How to Bridge the Digital Divide," CRC TR 224 Discussion Paper Series crctr224_2023_461, University of Bonn and University of Mannheim, Germany.
    5. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    6. José Tudón, 2022. "Distilling network effects from Steam," Quantitative Marketing and Economics (QME), Springer, vol. 20(3), pages 293-312, September.
    7. Mohammed Mardan & Mark J. Tremblay, 2022. "Network Effects: Betwixt and Between," CESifo Working Paper Series 10082, CESifo.

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