Dynamic competition with network externalities: how history matters

Hałaburda, Hanna; Jullien, Bruno; Yehezkel, Yaron

doi:10.1111/1756-2171.12304

Cited by 61 publications

(34 citation statements)

References 22 publications

(25 reference statements)

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“…Such pessimistic beliefs for the entrant are a standard manner to formalize path dependence favoring incumbents in a static model with network e ects (see for example the in uential paper by Caillaud and Jullien, 2003). e promising developments by Biglaiser and Crémer (2016) and Halaburda et al (2016) provide truly dynamic models with a similar avor. It is worth noting that rms in our se ing are assumed to be symmetric except for two aspects.…”

Section: E Baseline Modelmentioning

confidence: 99%

Entry into Complementary Good Markets with Network Effects

2019

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We study whether complementarities can help a rm enter a market with strong network e ects and incumbency advantages. We nd that bundling the network good with a complementary good, or using the network good as a loss leader (i.e., pricing below marginal cost) can facilitate entry, but that these strategies involve costs that may render them undesirable for the entrant. We also nd that the entrant always prefers to make the complementarity general (so that the incumbent bene ts from it as well) over having a rm-speci c complementarity and using a loss leading strategy. Pricing and product design strategies are interdependent: bundling (unbundled pricing) should be used if and only if the complementarity is speci c (general). Finally, we nd that bundling may be socially optimal because it allows entrants to challenge incumbents in markets with network e ects, thereby expanding the complementary bene ts enjoyed by consumers. is nding contrasts with the standard view of regulators, who see bundling as a way to foreclose entry and prevent competition, as in the recent case of the European Commission vs. Google.

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Section: E Baseline Modelmentioning

confidence: 99%

Entry into Complementary Good Markets with Network Effects

2019

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“…It is true that in praxis, some technological platforms have created monopolies that are hard to manage, so it can be inferred that public policies have not yet achieved the objective of avoiding these monopolies. This topic has become of high interest to the society in 2020 [ 58 , 59 ].…”

Section: Discussionmentioning

confidence: 99%

Discovering the Value Creation System in IoT Ecosystems

López

Castillo

Corchado

2021

Sensors

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Internet of Things (IoT) should not be seen only as a cost reduction mechanism for manufacturing companies; instead, it should be seen as the basis for transition to a new business model that monetizes the data from an intelligent ecosystem. In this regard, deciphering the operation of the value creation system and finding the balance between the digital strategy and the deployment of technological platforms, are the main motivations behind this research. To achieve the proposed objectives, systems theory has been adopted in the conceptualization stage, later, fuzzy logic has been used to structure a subsystem for the evaluation of input parameters. Subsequently, system dynamics have been used to build a computational representation and later, through dynamic simulation, the model has been adjusted according to iterations and the identified limits of the system. Finally, with the obtained set of results, different value creation and capture behaviors have been identified. The simulation model, based on the conceptualization of the system and the mathematical representation of the value function, allows to establish a frame of reference for the evaluation of the behaviour of IoT ecosystems in the context of the connected home.

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“…Second, some platform markets tend to exhibit a “winner‐take‐all” feature so that there is competition for the market but little competition on the market. Competition in this context is then shaped by history dependence (Arthur, ), incumbency advantage (Biglaiser & Crémer, ; Biglaiser, Crémer, & Dobos, ) and consumers’ expectations (Jullien & Pavan, ; Halaburda et al, ). In this context, a static view of mergers between platforms may be misleading either by overemphasizing current strong market position in a dynamically competitive environment or by underestimating the effect of a merger between future potential competitors.…”

Section: Conclusion and Future Researchmentioning

confidence: 99%

Horizontal mergers between multisided platforms: Insights from Cournot competition

Correia‐da‐Silva

Jullien

Lefouili

et al. 2019

Economics Manag Strategy

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This paper discusses the literature on horizontal mergers between multisided platforms and argues that the Cournot model can provide useful insights into the welfare effects of such mergers. To illustrate those insights, we develop a simple model in which two-sided platforms offer a homogeneous service and compete à la Cournot, and derive the effects of "average-marginal-costpreserving" mergers on consumers on both sides of the market. We conclude with a discussion of several research avenues that could be explored to understand better the impact of horizontal mergers between multisided platforms.

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Dynamic competition with network externalities: how history matters

Cited by 61 publications

References 22 publications

Entry into Complementary Good Markets with Network Effects

Entry into Complementary Good Markets with Network Effects

Discovering the Value Creation System in IoT Ecosystems

Horizontal mergers between multisided platforms: Insights from Cournot competition

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