On the incentive to attract competition with network effects
In this paper, we study the incumbent's incentive to share its essential facility when there exist network effects. We show that without network effects, the incumbent will charge an access fee high enough to deter the entry. with network effects, however, the incumbent always has an incentive to invite entry. We also show that if the potential entrant has to pay the entry cost, the incumbent has an incentive to subsidize the entrant with a low access fee
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|Date of creation:||11 Aug 2004|
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