Negative network effects and asymmetric pure price equilibria

• Type: Article in International Scientific Journal
• Date: 2023

Authors

Soeiro, R (Author) FEUP; Alberto A. Pinto (Author) FCUP

Journal

Title: Portuguese Economic Journal

Vol. 22

Pages: 99-124

ISSN: 1617-982X

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 1 Citation

Scopus - 1 Citation

Other information

Authenticus ID: P-00V-1FJ

DOI: 10.1007/s10258-021-00199-3

Abstract (EN): We show that in finite settings with identical firms and consumers, asymmetric pure price equilibria with positive profits exist. We consider a price competition duopoly for a homogeneous product. Demand stems from a second-stage consumption game at posted prices, with consumers' behavior impacted by negative network effects. We characterize equilibrium prices and demand. In all subgame-perfect pure price equilibria, both firms have positive profits, and in some, firms charge different prices.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 26