| Summary: | 碩士 === 國立東華大學 === 國際經濟研究所 === 97 === Network Externality, Compatibility in a Cournot Spatial Model
Abstract
This paper integrates network externality and compatibility into the Cournot spatial model. The main goal of the paper is to explore whether positive network externality influences firms’ location equilibriums through compatibility. Network externality varies the range of reservation price defined in the literature for spatial agglomeration and dispersion. Furthermore, we prove that while positive externality forces firms to move toward the center under complete compatibility; however, it stimulates firms to move apart from each other under complete incompatibility. In welfare analysis, we find social welfare increasing (decreasing) as Cournot type firms approach their competitor when network externality is larger (smaller) than a certain level within complete compatible.
Compatibility, Network Externality, Cooperation or Competition
Abstract
Given location exogenously with quadratic transportation cost, this paper explores the impact of installed base on Bertrand internet service providers’ prices and market share equilibriums while there is exists compatibility between them. Moreover, we analyze the optimal compatible choices of internet service providers within symmetric/asymmetric market size. The locationally advantage firm (incumbent) tends to block compatibility considering the superior market share. Network externality makes compatibility agreement more easily to achieve.
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