The Value of Incumbency in Heterogeneous Platforms

Arbeitspapier

We study the dynamics of competition in a model with network effects, an incumbent and entry. We propose a new way of representing the strategic advantages of incumbency in a static model. We then embed this static analysis in a dynamic framework with heterogeneous consumers. We completely identify the conditions under which inefficient equilibria with two platforms will emerge at equilibrium; explore the reasons why these inefficient equilibria arise; and compute the profits of the incumbent when there is only one platform at equilibrium.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5829

Classification and Topics

• Classification: Wirtschaft ; Information and Internet Services; Computer Software
• Subject: network effect ; network externalities ; platforms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Biglaiser, Gary ; Crémer, Jacques
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/130450
• Last update: 10.03.2025, 11:43 AM CET