Halaburda, Hanna, Jullien, Bruno and Yehezkel, Yaron (2016) Dynamic competition with network externalities: why history matters. TSE Working Paper, n. 16-636, Toulouse

There is a more recent version of this item available.
[thumbnail of wp_tse_636.pdf]
Download (686kB) | Preview


We consider dynamic competition among platforms in a market with network
externalities. A platform that dominated the market in the previous period be-
comes \focal" in the current period, in that agents play the equilibrium in which
they join the focal platform whenever such equilibrium exists. Yet when faced
with higher-quality competition, can a low-quality platform remain focal? In the
nite-horizon case, the unique equilibrium is ecient for \patient" platforms;
with an innite time horizon, however, there are multiple equilibria where ei-
ther the low- or high-quality platform dominates. If qualities are stochastic,
the platform with a better average quality wins with a higher probability, even
when its realized quality is lower, and this probability increases as platforms
become more patient. Hence social welfare may decline as platforms become
more forward looking.

Item Type: Monograph (Working Paper)
Language: English
Date: March 2016
Place of Publication: Toulouse
Uncontrolled Keywords: network externalities, dynamic competition, coordination
JEL Classification: L1 - Market Structure, Firm Strategy, and Market Performance
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 07 Jun 2016 13:08
Last Modified: 01 Jul 2021 13:37
OAI Identifier: oai:tse-fr.eu:30384
URI: https://publications.ut-capitole.fr/id/eprint/20417

Available Versions of this Item

View Item


Downloads per month over past year