New network goods

Joao Leao and Vasco Santos

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: New horizontally-differentiated goods involving product-specific network effects are quite prevalent. Consumers market-wide preference for each of these goods typically is initially unknown. Later, as sales data begin to accumulate, agents learn market-wide preferences, which thus become common knowledge. We study such a market, pinpointing the factors which determine whether the market-wide preferred firm reinforces its lead as time elapses, penetration and under-cost pricing prevail, and first- or last-mover effects in market-wide preferences occur.

Keywords: Network effects; horizontal differentiation (search for similar items in EconPapers)
JEL-codes: L11 L13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp439

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