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Title: Price Competition in a Differentiated Products Duopoly Under Network Effects

Author(s): Krina Griva and Nikolaos Vettas

Publication Date: August 2004

Keyword(s): network effects, price competition, product differentiation, product variety and quality

Programme Area(s): Industrial Organization

Abstract: We examine price competition under product-specific network effects, in a duopoly where the products are differentiated horizontally and vertically. When consumers' expectations are not affected by prices, firms may share the market equally, or one firm (possibly the low-quality one) may capture the entire market. When product qualities are different, we may also have interior asymmetric equilibria. With expectations affected by prices, firms' competition becomes more intense and the high quality firm captures a larger market share.

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Bibliographic Reference

Griva, K and Vettas, N. 2004. 'Price Competition in a Differentiated Products Duopoly Under Network Effects'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4574