THEMATIC CLUBS AND THE SUPREMACY OF NETWORK EXTERNALITIES
Journal of public economic theory, Vol.16(5), pp.706-729
10/2014
: 10.1111/jpet.12081
We explore the issue of minorities' survival in the presence of positive network externalities. We rely on a simple example of thematic clubs to illustrate why and how such survival problems might appear, first considering the case of simple-network effects (fully anonymous externalities) and then the case of cross-network effects (type-dependent externalities). In both cases, the analysis is framed as a simple noncooperative game with a continuum of players and binary action sets. There is a unique and interior Nash equilibrium under mild network effects and two corner equilibria under strong network effects, with one club driven out. A utilitarian planner would accentuate the clustering effects of network externalities, and call for the disappearance of the minority club more often than the noncooperative solution. A simple myopic learning algorithm capturing the progression of network lock-in effects is studied.
- THEMATIC CLUBS AND THE SUPREMACY OF NETWORK EXTERNALITIES
- Rabah Amir - Univ Iowa, Dept Econ, Iowa City, IA 52242 USAJean Gabszewicz - UCLouvainJoana Resende - Universidade do Porto
- Journal article
- Journal of public economic theory, Vol.16(5), pp.706-729
- Wiley
- 10.1111/jpet.12081
- 1097-3923
- 1467-9779
- 24
- name: Cef.up and FCT, award: PTDC/EGE-ECO/115625/2009
- English
- 10/2014
- Economics
- 9984380488902771
2