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Local network externalities and market segmentation
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Banerji, A. and Dutta, Bhaskar (2009) Local network externalities and market segmentation. International Journal of Industrial Organization, Vol.27 (No.5). pp. 605-614. doi:10.1016/j.ijindorg.2009.02.001 ISSN 0167-7187.
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Official URL: http://dx.doi.org/10.1016/j.ijindorg.2009.02.001
Abstract
This paper models interaction between groups of agents by means of a graph where each node represents a group of agents and an arc represents bilateral interaction. It departs from the standard Katz-Shapiro framework by assuming that network benefits are restricted only amongst groups of linked agents. It shows that even if rival firms engage in Bertrand competition, this form of network externalities permits strong market segmentation in which firms divide up the market and earn positive profits. The analysis also shows that some graphs or network structures do not permit such segmentation, while for others, there are easy to interpret conditions under which market segmentation obtains in equilibrium. (C) 2009 Elsevier B.V. All rights reserved.
Item Type: | Journal Article | ||||
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Subjects: | H Social Sciences > HC Economic History and Conditions | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Journal or Publication Title: | International Journal of Industrial Organization | ||||
Publisher: | Elsevier Science BV | ||||
ISSN: | 0167-7187 | ||||
Official Date: | September 2009 | ||||
Dates: |
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Volume: | Vol.27 | ||||
Number: | No.5 | ||||
Number of Pages: | 10 | ||||
Page Range: | pp. 605-614 | ||||
DOI: | 10.1016/j.ijindorg.2009.02.001 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
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