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On the incentive to attract competition with network effects

  • Gyu Ho Wang
  • Chongmin Kim
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    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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    Paper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 572.

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    Date of creation: 11 Aug 2004
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    Handle: RePEc:ecm:feam04:572
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