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Dynamic Price Competition with Network Effects

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  • Luis Cabral

    (NYU)

Abstract

I discuss various properties of the equilibrium, including the pricing function, the system's expected motion, and the stationary distribution of market shares. I derive several results analytically. I then confirm and extend these results by numerical computation. Finally, I use the model to estimate the barrier to entry create by network effects.

Suggested Citation

  • Luis Cabral, 2007. "Dynamic Price Competition with Network Effects," 2007 Meeting Papers 326, Society for Economic Dynamics.
  • Handle: RePEc:red:sed007:326
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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