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Cooperation and competition in markets with network externalities or learning curves

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  • Morasch, Karl

Abstract

The related phenomena of learning curve and network effects are quite common in oligopolistic markets. In this context the present paper discusses the incentives of a technological leader to share its exclusive technology with potential competitors. An alliance may be preferable because partner firms may be blocked. On the other hand compeition between the alliance partners will be intensied. It is shown that tha alliance solution will be chosen for medium values of learning curve or network effects. In almost all cases where firms decide to form an alliance this well enhance welfare.

Suggested Citation

  • Morasch, Karl, 2013. "Cooperation and competition in markets with network externalities or learning curves," Working Papers in Economics 2013,5, Bundeswehr University Munich, Economic Research Group.
  • Handle: RePEc:zbw:ubwwpe:20135
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    Keywords

    Alliances; Network externalities; Learning curve; Oligopoly;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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