Quality improvement and network externalities

We analyse the optimal pricing choice of an incumbent firm that sells a good with network externalities and is threatened by the entry of a higher quality variant. In the framework of a vertical differentiation model, we find a necessary and sufficient condition under which quality improvement occurs as a result of this competition.

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Year of publication:	2005-01-01
Authors:	Jean J., GABSWEWICZ ; Filomena, GARCIA
Institutions:	Institut de Recherche Économique et Sociale (IRES), École des Sciences Économiques de Louvain
Subject:	Vertical product differentiation \| network externalities \| quality improvement

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Extent:	application/pdf
Series:	Discussion Papers (ECON - Département des Sciences Economiques).
Type of publication:	Book / Working Paper
Language:	English
Notes:	The text is part of a series UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Sciences Economiques Number 2005064 2 pages long
Classification:	L11 - Production, Pricing, and Market Structure Size; Size Distribution of Firms ; L12 - Monopoly; Monopolization Strategies ; L15 - Information and Product Quality; Standardization and Compatibility
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004984708