Dynamic competition with network externalities: how history matters

• 成果类型: Article
• 署名作者: Halaburda, Hanna; Jullien, Bruno; Yehezkel, Yaron
• 署名单位: New York University; Centre National de la Recherche Scientifique (CNRS); Universite de Toulouse; Universite Toulouse 1 Capitole; Toulouse School of Economics; Tel Aviv University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12304
• 发表日期: 2020
• 页码: 3-31
• 关键词: economics

摘要

We consider dynamic competition among platforms in a market with network externalities. A platform that dominated the market in the previous period becomes focal in the current period, in that agents play the equilibrium in which they join the focal platform whenever such equilibrium exists. Yet when faced with higher-quality competition, can a low-quality platform remain focal? In the finite-horizon case, the unique equilibrium is efficient for patient platforms; with an infinite time horizon, however, there are multiple equilibria where either the low- or high-quality platform dominates. If qualities are stochastic, the platform with a better average quality wins with a higher probability, even when its realized quality is lower, and this probability increases as platforms become more patient. Hence, social welfare may decline as platforms become more forward looking.