IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Equilibrium Size in Network with Indirect Network Externalities

Listed author(s):
  • Baraldi A. Laura

I present a simple model of determination of the equilibrium size of a network with indirect network externalities. Indirect network externalities can generate complementarity between goods, and then the demand functions for the network good are those of the complementary goods: the result in the determination of the equilibrium size in a market with indirect network externalities is the "classical" result with complementary goods. I calculate the number of consumers of each group that should be optimal for firms in different market structures, as perfect competition, monopoly and duopoly. The result is that the equilibrium size of the network with indirect network externalities depends on the market structure; it is wider in perfect competition than in monopoly and duopoly; because of the externalities, perfect competition is inefficient, that is, the equilibrium size in this market structure is smaller than the equilibrium size chosen by a social planner; prices charged in a duopolistic market with indirect network externalities are greater than prices charged in a monopoly market, and then, the equilibrium size in duopoly is smaller than in monopoly; this is the classical result that we obtain with complementary goods, generated by the indirect network externalities, and it is different from the result in markets with direct network externalities in wich the equilibrium size in duopoly is greater than monopoly because the competition with substitute goods.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers

File URL:
Download Restriction: no

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Società editrice il Mulino in its journal Rivista italiana degli economisti.

Volume (Year): (2004)
Issue (Month): 3 ()
Pages: 475-494

in new window

Handle: RePEc:mul:jqat1f:doi:10.1427/19765:y:2004:i:3:p:475-494
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mul:jqat1f:doi:10.1427/19765:y:2004:i:3:p:475-494. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.