Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76086
Authors: 
Glazer, Amihai
Kanniainen, Vesa
Mustonen, Mikko
Year of Publication: 
2002
Series/Report no.: 
CESifo Working Paper 692
Abstract: 
We consider duopolists innovating and producing a good subject to network externalities, so that the reservation price of a consumer increases with aggregate consumption. The post-innovation network consists of two compatible sub-networks, with increased network valuation of the new product. When the non-innovating firm enjoys a larger profit than when neither firm innovates, free-riding on the winner's network as a public good arises. With such a network spillover, duopolists may underinvest in innovation.
Subjects: 
network goods
free riding
innovation
telecommunications
Document Type: 
Working Paper

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