Monopoly, Quality, and Network Externalities

Lambertini, Luca ; Orsini, Raimondello (2000) Monopoly, Quality, and Network Externalities. Bologna: Dipartimento di Scienze economiche DSE, p. 18. DOI 10.6092/unibo/amsacta/4975. In: Quaderni - Working Paper DSE (334). ISSN 2282-6483.
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Abstract

We describe the behaviour of a monopolist supplying a vertically di¤erentiated good with network externalities. Assuming a fixed cost of quality improvements we show that the presence of network externalities enhances the incentive to expand output associated with scale economies. Although the quality distortion operated by the monopolist increases with network externalities, the outputexpansion effect is dominant, so that the welfare loss due to monopoly power shrinks as the role of network externalities in determining consumers’ satisfaction becomes more relevant.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Orsini, Raimondello
Keywords
monopoly, quality distortion, network externalities, market coverage, social planning
Subjects
ISSN
2282-6483
DOI
Deposit date
05 Apr 2016 09:28
Last modified
05 Apr 2016 09:28
URI

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