General Network Effects and Welfare
(In)direct network effects arise frequently in economic models but, for reasons of analytical tractability, are often assumed to be linear. Here, we examine the general non-linear case with two platforms. We establish the conditions characterising equilibria and show that welfare changes can be related in a simple, intuitive way to the degree of diminishing returns of the network effects function.
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- Church Jeffrey & Gandal Neil & Krause David, 2008.
"Indirect Network Effects and Adoption Externalities,"
Review of Network Economics,
De Gruyter, vol. 7(3), pages 1-22, September.
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