Monopoly, Quality, and Network Externalities

Lambertini, Luca ; Orsini, Raimondello (2000) Monopoly, Quality, and Network Externalities. DOI 10.6092/unibo/amsacta/721.
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Abstract

We describe the behaviour of a monopolist supplying a vertically differentiated 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 output expansion 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 cover-age social planning
Subjects
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:02
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