The demand for electronic books (e-books) and the e-book readers are complementary. On the one hand, the emergence of e-book readers such as Amazon's Kindle has triggered the recent growth of the e-book market. On the other hand, several issues in the e-book market can affect the future of the...

We study a sequential model of Bayesian social learning in networks in which agents have heterogeneous preferences, and neighbors tend to have similar preferences — a phenomenon known as homophily. We find that the density of network connections determines the impact of preference diversity...

Ad Exchanges are emerging Internet markets where advertisers may purchase display ad placements, in real-time and based on specific viewer information, directly from publishers via a simple auction mechanism. Advertisers join these markets with a pre-specified budget and participate in multiple...

This paper empirically investigates the relation between vertical integration and video game performance in the US video game industry. For this purpose, we use a widely used data set from NPD on video game monthly sales from October 2000 to October 2007. We complement these data with handly...

Many video ads are designed to go 'viral,' so that the total number of views they receive depends on customers sharing the ads with their friends. This paper explores the relationship between number of views and how persuasive the ad is at convincing consumers to purchase or to adopt a favorable...

This paper examines price data on over 222 LCD televisions to estimate indirect network effects arising from two sources. First, we conjecture that the disconnect between the timing of when broadcasters are required to convert to an only-digital-signal world and when television manufacturers are...

When firms can identify their past customers, they may use information about purchase histories in order to price discriminate. We present a model with a monopolist and a continuum of heterogeneous consumers, where consumers can opt out from being identified, possibly at a cost. We find that...

In this paper, we study entrepreneurial innovations in an industry characterized by network effects. We show that the presence of network externalities tends to make the entrepreneur prefer sale to entry. Moreover, we also show that the incentive to innovate for entry decreases when network...

The open source model is a form of software development with source code that is typically made available to all interested parties. At the core of this process is a decentralized production process: open source software development is done by a network of unpaid software developers. Using data...

The concept of a 'global digital divide' is now common, and many cross-country studies of determinants of differences in computer and Internet penetration have been performed. The main conclusions and policy implications from these studies are relatively blunt: get richer, have more telephones,...