Network Externalities and Path Dependent Consumer Preferences

Keilbach, M. (1995). Network Externalities and Path Dependent Consumer Preferences. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-95-097

Preview

Text WP-95-097.pdf Download (765kB) | Preview

Abstract

Commodities of high technological level play an increasingly important role in the economy. The market of these commodities can exhibit network externalities if different standards compete. This is due to the fact that the market of these technologies is linked to the market of its co-products. Network externalities engender positive feedback on the market i.e. the higher the market share of a certain technology, the higher the demand for it. The present paper suggests a flexible formal model of the dynamics of these markets. This approach allows for identification the dynamic behaviour of markets under different hypotheses concerning behaviour of producers and consumers. It makes explicit the role of network externalities on markets that exhibit increasing returns.

Actions (login required)

View Item