THEMATIC CLUBS AND THE SUPREMACY OF NETWORK EXTERNALITIES

• Type: Article in International Scientific Journal
• Date: 2014

Authors

Rabah Amir (Author) Other; Jean Gabszewicz (Author) Other; Joana Resende (Author) FEP

Journal

Title: Journal Of Public Economic Theory

Vol. 16

Pages: 706-729

ISSN: 1467-9779

Publisher: Wiley-Blackwell

Indexing

ISI Web of Knowledge - 4 Citations

ISI Web of Science

Scopus - 6 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

Other information

Authenticus ID: P-009-XJ1

DOI: 10.1111/jpet.12081

Abstract (EN): We explore the issue of minorities' survival in the presence of positive network externalities. We rely on a simple example of thematic clubs to illustrate why and how such survival problems might appear, first considering the case of simple-network effects (fully anonymous externalities) and then the case of cross-network effects (type-dependent externalities). In both cases, the analysis is framed as a simple noncooperative game with a continuum of players and binary action sets. There is a unique and interior Nash equilibrium under mild network effects and two corner equilibria under strong network effects, with one club driven out. A utilitarian planner would accentuate the clustering effects of network externalities, and call for the disappearance of the minority club more often than the noncooperative solution. A simple myopic learning algorithm capturing the progression of network lock-in effects is studied.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 24