Coordination and Critical Mass in a Network Market: An Experimental Investigation

Bradley Ruffle, Avi Weiss and Amir Etziony

No 1001, Working Papers from Ben-Gurion University of the Negev, Department of Economics

Abstract: A network market is a market in which the benefit each consumer derives from a good is an increasing function of the number of consumers who own the same or similar goods. A major obstacle that plagues the introduction of a network good is the ability to reach critical mass, namely, the minimum number of buyers required to render purchase worthwhile. This can be likened to a coordination game with multiple Pareto-ranked equilibria. We introduce an experimental paradigm to study consumers' ability to coordinate on purchasing the network good. Our results highlight the central importance of the level of the critical mass.

Keywords: experimental economics; network goods; coordination game; critical mass (search for similar items in EconPapers)
JEL-codes: C92 L19 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2010
New Economics Papers: this item is included in nep-com, nep-exp and nep-net
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Citations: View citations in EconPapers (7)

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Working Paper: Coordination and Critical Mass in a Network Market: An Experimental Investigation (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:bgu:wpaper:1001

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