Agenda

20 Nov 2019 12:30

Rabah Amir - Oligopoly with network effects: Firm-specific versus single network

Meeting Room 1, Campus San Giobbe, Venezia

Rabah Amir, Tippie College of Business, University of Iowa

Abstract We consider symmetric oligopolies with positive network effects where each firm has its own proprietary network, which is incompatible with that of its rivals. We provide minimal conditions for the existence of (non-trivial) symmetric equilibrium in a general setting. We analyze the viability of industries with firm-specific networks, and show that the prospects for successful launch decrease with more firms in the market. This is a major reversal from the case of single-network industries. A central part of the paper compares the viability and market performance of industries with compatible and incompatible networks, and shows that viability, output, (endogenous) demand, and social welfare are higher for the former. However, the comparison of industry price, profit and consumer surplus requires respective qualifications, of a general nature for the former two but not for the latter. Overall, these results provide theoretical grounding in a general but not universal sense for the conventional view that compatibility leads to superior performance, which was hitherto based on case studies and stylized facts.

Organizzatore

Dipartimento di Economia (EcSeminars)

Link

https://tippie.uiowa.edu/people/rabah-amir

Allegati

Paper 228 KB
Presentation 123 KB

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