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on Network Economics |
| By: | Doh-Shin Jeon; Sjaak Hurkens |
| Abstract: | We study a retail benchmarking approach to determine access prices for interconnected networks. Instead of considering fixed access charges as in the existing literature, we study access pricing rules that determine the access price that network i pays to network j as a linear function of the marginal costs and the retail prices set by both networks. In the case of competition in linear prices, we show that there is a unique linear rule that implements the Ramsey outcome as the unique equilibrium, independently of the underlying demand conditions. In the case of competition in two-part tariffs, we consider a class of access pricing rules, similar to the optimal one under linear prices but based on average retail prices. We show that firms choose the variable price equal to the marginal cost under this class of rules. Therefore, the regulator (or the competition authority) can choose one among the rules to pursue additional objectives such as consumer surplus, network coverage or investment: for instance, we show that both static and dynamic e±ciency can be achieved at the same time. |
| Keywords: | Networks, Access Pricing, Interconnection, Competition Policy, Telecommunications, Investment |
| JEL: | D4 K21 L41 L51 L96 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1055&r=net |
| By: | Liliane Karlinger; Massimo Motta |
| Abstract: | We consider an incumbent firm and a more efficient entrant, both offering a network good to several asymmetric buyers. The incumbent disposes of an installed base, while the entrant has a network of size zero at the outset, and needs to attract a critical mass of buyers to operate. We analyze different price schemes (uniform pricing, implicit price discrimination - or rebates, explicit price discrimination) and show that the schemes which - for given market structure - induce lower equilibrium prices are also those under which the incumbent is more likely to exclude the rival. |
| JEL: | L11 L14 L42 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2007/30&r=net |
| By: | Heli Koski |
| Abstract: | ABSTRACT : This paper addresses the question of the software companies’ timing of adoption of the open source software (OSS) business models comprising the supply of OSS products and/or services. The game-theoretic technology adoption models do not explain well the observed diffusion patterns of the OSS business model among the sample of 716 European software firms. Instead, it seems that the network effects influentially shape the diffusion path of the OSS supply strategies. Our study further contributes to the technology diffusion literature as our econometric model aims at separating, unlike the previous empirical studies on technology diffusion, the role that the replacement effect has in the diffusion patterns of new technologies. Our data detect a clear replacement effect hindering the incumbents’ investments in new technology. The expected price declines of the computer programs – and thus the expected declining license revenues from the proprietary software – accelerate less the incumbent firms’ timing of adoption of the OSS supply model than that of the entrants. |
| Keywords: | timing of technology adoption, diffusion, open source software, business models |
| JEL: | C41 D21 D23 L2 L86 O14 |
| Date: | 2007–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1102&r=net |