On Price Elasticities in the Presence of Network Effects

Price elasticities characterize the effect of price changes on demands in a multi-product context. We demonstrate and explain two perverse properties concerning price elasticities in the presence of network effects when three or more substitutable products are involved: Cross-price elasticities are not necessarily positive, and own-price elasticities are not necessarily negative. These findings imply that the consequences of firms' price moves in a competitive market when network effects are in play deserve further scrutiny

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Year of publication:	2015
Authors:	Chen, Zhiyuan
Other Persons:	Liang, Xiaoying (contributor) ; Xie, Lei (contributor) ; Yan, Houmin (contributor)
Publisher:	[2015]: [S.l.] : SSRN
Subject:	Preiselastizität \| Price elasticity \| Netzwerkökonomik \| Network economics \| Theorie \| Theory

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