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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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
|Digital Object Identifier (DOI):||doi:10.1016/S0014-2921(99)00067-7|
|Additional Information:||JEL classification codes: C73, C78, D42, L12|
|Keywords:||coase conjecture, network externalities|
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Date Deposited:||18 Jul 2006|
|Last Modified:||06 Aug 2015 02:30|
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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