Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Monday, April 9, 2012

Price and quality decisions under network effects

Posted by D. Daniel Sokol

Noemi Navarro (Departement d’economique and GREDI, Universite de Sherbrooke) analyzes Price and quality decisions under network effects.

ABSTRACT: I analyze monopoly pricing and quality decisions under network effects. High quality premium and low quality punishment are found to depend on how the impact of marginal costs on quality relates to the intensity of the network effect and the optimism of the producer about final demand. More precisely, marginal costs have to be low enough (but not too low) with respect to the intensity of the network effects and/or the optimism about final demand so that higher prices reflect higher quality. A similar conclusion can be drawn about incentives for quality provision, whenever quality is considered endogenous together with price.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/04/price-and-quality-decisions-under-network-effects-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0168e8a2fb99970c

Listed below are links to weblogs that reference Price and quality decisions under network effects :

Comments

Post a comment