Network externalities and the Coase conjecture


Mason, Robin (2000) Network externalities and the Coase conjecture. European Economic Review, 44, (10), 1981-1992. (doi:10.1016/S0014-2921(99)00067-7).

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Description/Abstract

This paper addresses two general questions. First, what is the effect of market structure on the development of a network in a dynamic model with rational expectations? Secondly, is the intuition that network externalities are ‘economies of scale on the demand side’ correct? These questions are examined in a model of durable good production in the presence of network externalities. Two results are presented. First, the Coase conjecture fails in its strongest sense when network benefits are increasing in the current network size. Secondly, a committed monopolist may be socially preferable to a time consistent producer when network externalities are sufficiently large. The analysis indicates an analogy between network externalities and learning-by-doing

Item Type: Article
Additional Information: JEL classification codes: C73, C78, D42, L12
ISSNs: 0014-2921 (print)
Related URLs:
Keywords: coase conjecture, network externalities
Subjects: H Social Sciences > HB Economic Theory
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 33003
Date Deposited: 18 Jul 2006
Last Modified: 27 Mar 2014 18:20
Contact Email Address: ram2@soton.ac.uk
URI: http://eprints.soton.ac.uk/id/eprint/33003

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