Overcoming the Coordination Problem: Dynamic Formation of Networks

Jack Ochs and In-Uck Park

No 2004-18, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: We analyze an entry game with multiple periods. In each period privately informed agents who have not yet joined decide whether to subscribe to a network. Subscribers derive benefits in future periods depending on the network size. We study the case where agents are sufficiently patient and show that there exists a unique symmetric equilibrium if the number of existing subscribers is common knowledge in each period. This resolves the coordination problem which is prevalent in markets with network externalities.

Keywords: Strategic complementarity; network externality; coordina-tion (search for similar items in EconPapers)
JEL-codes: D82 D85 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2004-09
Note: July, 2004
References: Add references at CitEc
Citations: View citations in EconPapers (11)

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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/13905/wp2004-18a.pdf

Related works:
Journal Article: Overcoming the coordination problem: Dynamic formation of networks (2010)
Working Paper: Overcoming the Coordination Problem: Dynamic Formation of Networks (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2004-18

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