Network effects, market structure and industry performance

Rabah Amir () and Natalia Lazzati

Journal of Economic Theory, 2011, vol. 146, issue 6, 2389-2419

Abstract: This paper analyzes oligopolistic markets with network externalities. Exploiting a minimal complementarity structure on the model primitives that allows for pure network goods, we prove existence of non-trivial fulfilled-expectations equilibrium. We formalize the concept of industry viability, investigate its determinants, and show that it improves with more firms in the market and/or by technological progress. These results enlighten some well-known conclusions from case studies in the management strategy literature. We also characterize the effects of market structure on industry performance, which depart substantially from ordinary markets. The approach relies on lattice-theoretic methods, supplemented with basic insights from nonsmooth analysis.

Keywords: Network goods; Demand-side externalities; Industry viability; Industry start up; Supermodularity (search for similar items in EconPapers)
JEL-codes: C72 D43 L13 L14 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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Related works:
Working Paper: Network Effects, Market Structure and Industry Performance (2010)
Working Paper: Network Effects, Market Structure and Industry Performance (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:146:y:2011:i:6:p:2389-2419

DOI: 10.1016/j.jet.2011.10.006

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