Market size effects on long-run demand of a network good

Dai Zusai

Economics Bulletin, 2015, vol. 35, issue 4, 2768-2775

Abstract: We consider optimal dynamic pricing under a network externality. We construct the demand dynamic of the network good from the aggregate best response dynamic of agents who have different adoption costs. When the distribution of adoption costs is convex, expansion of potential market inevitably enlarges long-run demand.

Keywords: entry game; platform; dynamic optimization; network externality; size effects; non-concavity (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
Date: 2015-12-13
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