2015
DOI: 10.1016/j.econlet.2015.10.039
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Non-monotonic network effects and market entry

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Cited by 2 publications
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“…Schenk ( 2004) derive equilibrium demands in the same way without, however, mentioning the formation of expectations in their three-firm model. By contrast, Lundberg (2015) explicitly makes the assumption of fulfilled expectations to derive the symmetric 𝑛 -firm price equilibrium, but fixes all other prices when determining the individual best-reply function.…”
Section: Profitabilitymentioning
confidence: 99%
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“…Schenk ( 2004) derive equilibrium demands in the same way without, however, mentioning the formation of expectations in their three-firm model. By contrast, Lundberg (2015) explicitly makes the assumption of fulfilled expectations to derive the symmetric 𝑛 -firm price equilibrium, but fixes all other prices when determining the individual best-reply function.…”
Section: Profitabilitymentioning
confidence: 99%
“…Their work uses the symmetric price equilibrium with symmetric firm locations and checks alternative assumptions for the shape of network effects (whether they are or are not purely linear) or those of transportation costs (whether these are linear or quadratic); they all conclude that the equilibrium number of suppliers exceeds the optimum, for a large range of values of the network effects, both positive and negative. In the same general framework, Lundberg (2015) finds that, on the contrary, entry may be insufficient in equilibrium if the network effects are nonmonotonic. Finally, Jonard and Schenk (2004) address the impact of positive network effects on the threat of potential entry; they show that network compatibility (as implied by coordinated location choices to reduce product differentiation and afford a larger network) in a duopoly favors the entry of a competitor.…”
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confidence: 94%
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