Dynamic Games of Network Effects

• Type: Article in International Conference Proceedings Book
• Date: 2011

Authors

Garcia, F (Author) Other; Joana Resende (Author) FEP

Conference proceedings International

Title: Springer Proceedings in Mathematics

Pages: 323-342

International Conference DYNA 2008

Braga, PORTUGAL, SEP 08-12, 2008

Indexing

ISI Web of Knowledge - 3 Citations

Scopus - 3 Citations

Other information

Authenticus ID: P-002-WJ1

DOI: 10.1007/978-3-642-14788-3_25

Abstract (EN): Network effects occur when the benefit that agents derive from a good or service depends on how many other agents adopt the same good or service. This strategic complementarity between consumers' actions has several implications on tie behavior of firms: For instance, firms need to gain advantage from early marketing stages. Network effects are intrinsically a dynamic phenomenon: past consumption of the good influences the utility of present consumers. This effect can be either direct, when consumers value interaction with their peers, and/or indirect, through an increase in the quality of the good. This chapter surveys the literature on dynamic network effects. First we provide general formulations for the modelization of network effects in a dynamic setting. Second, we analyse recent developments in the literature on firms' strategies in the context of dynamic network effects. We survey the literature both on monopoly and oligopoly markets. In the case of oligopoly markets, we distinguish between situations in which firms produce horizontally and vertically differentiated goods. Main results on pricing and evolution of market shares are exposed.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 20