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Price Competition in a Differentiated Products Duopoly Under Network Effects

  • Griva, Krina
  • Vettas, Nikolaos

We examine price competition under product-specific network effects, in a duopoly where the products are differentiated horizontally and vertically. When consumers' expectations are not affected by prices, firms may share the market equally, or one firm (possibly the low-quality one) may capture the entire market. When product qualities are different, we may also have interior asymmetric equilibria. With expectations affected by prices, firms' competition becomes more intense and the high quality firm captures a larger market share.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4574.

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Date of creation: Aug 2004
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Handle: RePEc:cpr:ceprdp:4574
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