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Erscheinungsjahr: 
2022
Schriftenreihe/Nr.: 
CESifo Working Paper No. 9717
Verlag: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Zusammenfassung: 
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 always socially efficient since a socially inferior supplier may prevail if has a stand-alone-benefit advantage and only a modest network-benefit disadvantage.
Schlagwörter: 
network externalities
equilibrium uniqueness
price discrimination
monotonicity criterion
dominant value margin
divide and conquer
JEL: 
L13
L40
D43
Dokumentart: 
Working Paper
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