 Network effects, aftermarkets and the Coase conjecture: A dynamic Markovian approachDidier Laussel (), Ngo Long and Joana Resende Post-Print from HAL Abstract: This paper investigates the expansion of the network of a monopolist firm that produces a durable good and is also involved in the corresponding aftermarket. We characterize the Markov Perfect Equilibrium of the continuous time dynamic game played by the monopolist and the forward-looking consumers, under the assumption that consumers benefit from the subsequent expansion of the network. The paper contributes to the theoretical discussion on the validity of the Coase conjecture, analyzing whether Coase's prediction that the monopolist serves the market in a "twinkling of an eye" remains valid in our setup. We conclude that the equilibrium network development may actually be gradual, contradicting Coase's conjecture. We find that a necessary condition for such a result is the existence of aftermarket network effects that accrue (at least partly) to the monopolist firm. Keywords: Aftermarkets; Coase conjecture; Durable good; Network externalities (search for similar items in EconPapers) Published in International Journal of Industrial Organization, 2015, 41 (C), pp.84--96. ⟨10.1016/j.ijindorg.2015.06.001⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01457339 DOI: 10.1016/j.ijindorg.2015.06.001 Access Statistics for this paper More papers in Post-Print from HAL |
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