The value of incumbency for heterogeneous platforms

Biglaiser, Gary and Crémer, Jacques (2016) The value of incumbency for heterogeneous platforms. TSE Working Paper, n. 16-630, Toulouse

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Official URL: http://tse-fr.eu/pub/30270

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 and embed it in a dynamic framework with heterogeneous consumers. We completely identify the conditions under which inefficient equilibria with two platforms emerge at equilibrium; explore the reasons why these inefficient equilibria arise; compute the profits of the incumbent and demonstrate that the incumbency advantage does not improve much, if at all, when going from a static to a dynamic framework.

Item Type: Monograph (Working Paper)
Language: English
Date: March 2016
Place of Publication: Toulouse
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 21 Mar 2016 15:19
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:30270
URI: http://publications.ut-capitole.fr/id/eprint/19808

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