Quality improvement and network externalities
We analyse the optimal pricing choice of an incumbent firm that sells a good with network externalities and is threatened by the entry of a higher quality variant. In the framework of a vertical differentiation model, we find a necessary and sufficient condition under which quality improvement occurs as a result of this competition.
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- Baake, Pio & Boom, Anette, 2001.
"Vertical product differentiation, network externalities, and compatibility decisions,"
International Journal of Industrial Organization,
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"Installed Base and Compatibility With Implications for Product Preannouncements,"
385, Massachusetts Institute of Technology (MIT), Department of Economics.
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- Gabszewicz, J.J. & Pepall, L. & Thisse, J.F., 1992.
"Sequential Entry with Brand Loyalty Caused by Consumer Learning-by-Using,"
Papiers d'Economie MathÃ©matique et Applications
92-17, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Gabszewicz, Jean & Pepall, Lynne & Thisse, Jacques-Francois, 1992. "Sequential Entry with Brand Loyalty Caused by Consumer Learning-by-Using," Journal of Industrial Economics, Wiley Blackwell, vol. 40(4), pages 397-416, December.
- GABSZEWICZ,Â Jean J. & PEPALL, Lynne & THISSE, Jacques-FranÃ§ois, . "Sequential entry with brand loyalty caused by consumer learning-by-using," CORE Discussion Papers RP 1018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Bental, Benjamin & Spiegel, Menahem, 1995. "Network Competition, Product Quality, and Market Coverage in the Presence of Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 43(2), pages 197-208, June.
- Shy, Oz, 1996. "Technology revolutions in the presence of network externalities," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 785-800, October.
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