FUNCTIONAL DEGRADATION AND ASYMMETRIC NETWORK EFFECTS -super-
In markets subject to network effects, firms often remove some functions of their original products and sell a functionally-downgraded version at a lower or zero price. This paper aims to provide a pure network effect based explanation of such a practice. Building a functional degradation model with asymmetric network effects, we investigate when and why firms have incentives to introduce a functionally-degraded good and discuss its welfare implication. Copyright Blackwell Publishing Ltd. 2006.
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Volume (Year): 54 (2006)
Issue (Month): 2 (06)
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