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Network externalities and differentiation in an entry model

Author

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  • Stefano Colombo

    () (Catholic University of Milan)

Abstract

In a market characterized by network externalities, we consider a situation in which an established incumbent faces a new entrant: the differentiation degree chosen by the entrant increases with the network externalities, while the price set by the incumbent initially increases with the network externalities but eventually it decreases with the network externalities.

Suggested Citation

  • Stefano Colombo, 2011. "Network externalities and differentiation in an entry model," Economics Bulletin, AccessEcon, vol. 31(1), pages 75-84.
  • Handle: RePEc:ebl:ecbull:eb-10-00750
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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I1-P9.pdf
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    More about this item

    Keywords

    Network externalities; differentiation; entrance;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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