nep-net New Economics Papers
on Network Economics
Issue of 2007‒05‒19
five papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Avoiding Market Dominance: Product Compatibility in Markets with Network Effects By Jiawei Chen; Ulrich Doraszelski; Joseph E. Harrington, Jr.
  2. COOPERATION IN LARGE NETWORKS: AN EXPERIMENTAL By Juan Camilo Cárdenas P.; Christian R. Jaramillo H.
  3. Communication Networks in the N-Player Electronic Mail Game By Kris de Jaegher
  4. Efficient Communication in the Electronic Mail Game By Kris de Jaegher
  5. Equilibrium Market and Pricing Structures in Virtual Platform Duopoly By Behringer, Stefan

  1. By: Jiawei Chen; Ulrich Doraszelski; Joseph E. Harrington, Jr.
    Abstract: As is well-recognized, market dominance is a typical outcome in markets with network effects. A firm with a larger installed base offers a more attractive product which induces more consumers to buy its product which produces a yet bigger installed base advantage. Such a setting is investigated here but where firms have the option of making their products compatible. When firms have similar installed bases, they make their products compatible in order to expand the market. Nevertheless, random forces could result in one firm having a bigger installed base in which case the larger firm may make its product incompatible. We find that strategic pricing tends to prevent the installed base differential from expanding to the point that incompatibility occurs. This dynamic is able to neutralize increasing returns and avoid the emergence of market dominance.
    Date: 2007–02
  2. By: Juan Camilo Cárdenas P.; Christian R. Jaramillo H.
    Abstract: We present a new design of a simple public goods experiment with a large number of players, where up to 80 people in a computer lab have the possibility to connect with others in the room to induce more cooperators to contribute to the public good and overcome the social dilemma. This experimental design explores the possibility of social networks to be used and institutional devices to create the same behavioral responses we observe with small groups (e.g. commitments, social norms, reciprocity, trust, shame, guilt) that seem to induce cooperative behavior in the private provision of public goods. The results of our experiment suggest that the structure of the network affects not only the players’ ability to communicate, but their willingness to do so as well. We also find that the local connectivity structure of the network has an important role as determinant of the willingness of the players to cooperate.
    Date: 2007–04–05
  3. By: Kris de Jaegher
    Abstract: This paper shows that Rubinstein’s results on the two-player electronic mail game do not extend to the N-player electronic mail game.
    Keywords: Communication Networks, N-Player Electronic Mail Game
    JEL: D85 C72
    Date: 2007–03
  4. By: Kris de Jaegher
    Abstract: The literature on the electronic mail game shows that players’ mutual expectations may lock them into requiring an inefficiently large number of confirmations and confirmations of confirmations from one another. This paper shows that this result hinges on the assumption that, with the exception of the first message, each player can only send a message when receiving an immediately preceding message. We show that, once this assumption is lifted, equilibria involving confirmations of confirmations no longer pass standard refinements of the Nash equilibrium, and are no longer evolutionary stable.
    Keywords: Electronic Mail Game, Efficient Communication, Grounding, Equilibrium Refinements, Evolutionary Stability
    JEL: C70 D72
    Date: 2007–01
  5. By: Behringer, Stefan
    Abstract: We investigate the equilibrium market sturcture in virtual platform duopoly (auctions or other market forms) that are prevalent in internet settings. We take full account of the complexity of network effects in such markets and determine optimal pricing strategies. We invstigate the welfare implications of such strategies, look at the impact of non-exclusive services and at what happens in large markets.
    Keywords: Two-sided Markets; Duopoly Pricing;
    JEL: D44 L14
    Date: 2005–12–21

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