Quality improvement and network externalities

Gabswewicz Jean J. and Filomena Garcia
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Gabswewicz Jean J.: UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)

No 2005064, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: 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.

Keywords: Vertical product differentiation; network externalities; quality improvement (search for similar items in EconPapers)
JEL-codes: L11 L12 L15 (search for similar items in EconPapers)
Pages: 23
Date: 2005-01-01
New Economics Papers: this item is included in nep-com, nep-mic and nep-net
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Working Paper: Quality improvement and network externalities (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvec:2005064

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