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The competition of user networks: Ergodicity, lock-ins, and metastability

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  • Woeckener, Bernd W.

Abstract

This paper models the competition of user networks as a continuous-time Markov process. It presents a dynamic version of the Discrete Choice Analysis with state-dependent choice probabilities. Among other things, we show that the network competition can be characterized by the coexistence of lock-in regimes and a 'metastable' state - i.e. a state which is a probability maximum for a finite period of time. Then, unlike in the case of ergodicity or of simple lock-in scenarios, the networks can coexist for a considerable period of time, although the market is a natural monopoly.

Suggested Citation

  • Woeckener, Bernd W., 1998. "The competition of user networks: Ergodicity, lock-ins, and metastability," Tübinger Diskussionsbeiträge 127, University of Tübingen, School of Business and Economics.
    • Handle: RePEc:zbw:tuedps:127
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    File URL: https://www.econstor.eu/bitstream/10419/104944/1/tdb127.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Ergodicity; Lock-in; Metastability; Network effects; Networks;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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