Network Effects and Multinetwork Sellers' Dynamic Pricing in the US Smartphone Market

• 成果类型: Article
• 署名作者: Liu, Yue; Luo, Rong
• 署名单位: Central University of Finance & Economics; Renmin University of China
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4530
• 发表日期: 2023
• 页码: 3297-3318
• 关键词: network effect; multinetwork firms; dynamic pricing game; network concentration; value function approximation

摘要

Although the literature on network effects has focused on single-network firms, many industries feature multinetwork firms that play more complex dynamic pricing games. In this paper, we estimate the network effect at the smartphone operating system (OS) level and study multi-OS telecommunication carriers' dynamic pricing strategies in an oligopolistic setting, using data on the U.S. smartphone industry. We find a positive OS network effect. Counterfactual analysis indicates that if the carriers were single-OS sellers, they would increase the phone prices of large OSs and lower the prices of small OSs, which reduces the consumer surplus by $6.99 billion. Further analyses show that the multi-OS carriers choose lower prices for large OSs than for small OSs because of their preference for OS concentration.