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.
|Date of creation:||01 Jan 2005|
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- Joseph Farrell & Garth Saloner, 1985.
"Installed Base and Compatibility With Implications for Product Preannouncements,"
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Wiley Blackwell, vol. 40(4), pages 397-416, December.
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- GABSZEWICZ, Jean J. & PEPALL, Lynne & THISSE, Jacques-François, "undated". "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).
- Baake, Pio & Boom, Anette, 2001.
"Vertical product differentiation, network externalities, and compatibility decisions,"
International Journal of Industrial Organization,
Elsevier, vol. 19(1-2), pages 267-284, January.
- Anette Boom & Pio Baake, "undated". "Vertical Product Differentiation, Network Externalities, and Compatibility Decisions," Papers 010, Departmental Working Papers.
- Katz, Michael L & Shapiro, Carl, 1992. "Product Introduction with Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 55-83, March.
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