Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130450
Authors: 
Biglaiser, Gary
Crémer, Jacques
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5829
Abstract: 
We study the dynamics of competition in a model with network effects, an incumbent and entry. We propose a new way of representing the strategic advantages of incumbency in a static model. We then embed this static analysis in a dynamic framework with heterogeneous consumers. We completely identify the conditions under which inefficient equilibria with two platforms will emerge at equilibrium; explore the reasons why these inefficient equilibria arise; and compute the profits of the incumbent when there is only one platform at equilibrium.
Subjects: 
network effect
network externalities
platforms
JEL: 
L86
Document Type: 
Working Paper

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