NETWORK EXTERNALITIES, DOMINANT VALUE MARGINS, AND EQUILIBRIUM UNIQUENESS

Jay Pil Choi, Christodoulos Stefanadis

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

We examine tippy network markets that accommodate price discrimination. The analysis shows that when a mild equilibrium refinement, the monotonicity criterion, is adopted, network competition may have a unique subgame-perfect equilibrium regarding the winner's identity; the prevailing brand may be fully determined by its product features. We bring out the concept of the dominant value margin, which is a metric of the effectiveness of divide-and-conquer strategies. The supplier with the larger dominant value margin may always sell to all customers in equilibrium. Such a market outcome is not necessarily socially efficient.

Original languageEnglish
Pages (from-to)1805-1827
Number of pages23
JournalInternational Economic Review
Volume63
Issue number4
DOIs
Publication statusPublished - 2022 Nov

Bibliographical note

Publisher Copyright:
© (2022) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'NETWORK EXTERNALITIES, DOMINANT VALUE MARGINS, AND EQUILIBRIUM UNIQUENESS'. Together they form a unique fingerprint.

Cite this