Price Strategies and Compatibility in Digital NetworksØystein Foros International Journal of the Economics of Business, 2007, vol. 14, issue 1, pages 85-97 Abstract: We analyze competition between two horizontally differentiated network providers. New technologies help the providers to collect consumer-specific information, and such technologies increase the providers' ability to use price discrimination. One example is the mobile providers' choice of investing into third generation mobile systems (3G). Compared to the current 2G systems (GSM), 3G gives the providers more accurate customer specific information (e.g. with respect to customers' location at any time). Since new technologies give the opportunity to implement price discrimination, an interesting question is how the price strategies (price discrimination or not) affect the incentives to unilaterally establish a walled garden where the rival's customers have imperfect access. The main message of the paper is that walled garden strategies are more likely when firms use price discrimination than when they all use linear pricing. Keywords: Compatibility; Network Effects; Price Discrimination; Internet; Competition (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:taf:ijecbs:v:14:y:2007:i:1:p:85-97 Ordering information: This journal article can be ordered from Access Statistics for this article International Journal of the Economics of Business is edited by Eleanor Morgan and H.E. Frech More articles in International Journal of the Economics of Business from Taylor and Francis Journals |
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