Network externalities, discrete demand shifts, and submarginal-cost pricing

The introduction of a new product often causes a massive (discrete) demand shift to the new product. This study demonstrates that if a large-scale demand shift to a new product is accompanied by network externalities, it may result in `submarginal-cost pricing,' by which the seller sets its price below the marginal cost. This finding casts new light on dumping and safeguard issues in the real world.

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Year of publication:	2006
Authors:	Yano, Makoto ; Dei, Fumio
Published in:	Canadian Journal of Economics. - Canadian Economics Association - CEA. - Vol. 39.2006, 2, p. 455-476
Publisher:	Canadian Economics Association - CEA

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Extent:	application/pdf
Type of publication:	Article
Notes:	Published
Classification:	D42 - Monopoly
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005770595