Price Competition in a Differentiated Products Duopoly Under Network Effects

Nikolaos Vettas () and Krina Griva ()

No 4574, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We examine price competition under product-specific network effects, in a duopoly where the products are differentiated horizontally and vertically. When consumers' expectations are not affected by prices, firms may share the market equally, or one firm (possibly the low-quality one) may capture the entire market. When product qualities are different, we may also have interior asymmetric equilibria. With expectations affected by prices, firms' competition becomes more intense and the high quality firm captures a larger market share.

Keywords: Network effects; Product differentiation; Product variety; Quality; Price competition (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2004-08
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-net
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Citations: View citations in EconPapers (15)

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Journal Article: Price competition in a differentiated products duopoly under network effects (2011)
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