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On a Stackelberg leader's incentive to invite entry into horizontally differentiated oligopolies with network externalities: A reexamination

Ryoma Kitamura () and Tsuyoshi Toshimitsu
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Ryoma Kitamura: Faculty of Economics, Otemon Gakuin University

No 203, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: We develop a model of horizontally differentiated oligopolies with network externalities and reconsider a Stackelberg leader's incentive to invite entry, a problem previously examined by Economides (1996) and Kim (2002). We demonstrate that a Stackelberg leader has (does not have) an incentive to invite entry if the degree of network externalities is larger (smaller) than that of the product substitutability, such that a follower's profit increases (decreases).

Keywords: Network externality; Horizontally differentiated oligopoly; Stackelberg competition; Entry; Passive expectation; Responsive expectation (search for similar items in EconPapers)
JEL-codes: D21 D43 D62 L13 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2020-02
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-mic
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http://192.218.163.163/RePEc/pdf/kgdp203.pdf First version, 2020 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:203

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