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Strategic Product Pre-announcements in Markets with Network Effects




It is a widely adopted practice for firms to announce new products well in advance of actual market availability. The incentives for pre-announcements are stronger in markets with network effects because they can be used to induce the delay of consumers’ purchases and forestall the build-up of rival products’ installed bases. However, such announcements often are not fulfilled, raising antitrust concerns. We analyze the effects of product pre-announcements in the presence of network effects when firms are allowed to strategically make false announcements. We also discuss their implications for consumer welfare and anti-trust policy.

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  • Jay Pil Choi & Eirik Gaard Kristiansen & Jae Nahm, 2005. "Strategic Product Pre-announcements in Markets with Network Effects," Working Papers 05-09, NET Institute, revised Sep 2005.
  • Handle: RePEc:net:wpaper:0509

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    References listed on IDEAS

    1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    2. Jay Pil Choi & Eirik Gaard Kristiansen & Jae Nahm, 2005. "An Economic Analysis of Product Pre-announcements," CESifo Economic Studies, CESifo, vol. 51(2-3), pages 299-319.
    3. Heiko A. Gerlach, 2004. "Announcement, Entry, and Preemption When Consumers Have Switching Costs," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 184-202, Spring.
    4. Joel Sobel, 1985. "A Theory of Credibility," Review of Economic Studies, Oxford University Press, vol. 52(4), pages 557-573.
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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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