Entry into a network industry: consumers' expectations and firms' pricing policies

Angelo Stefano Baglioni

Entry into a network industry: consumers' expectations and firms' pricing policies

Risultato della ricerca: Contributo in rivista › Articolo in rivista › peer review

Abstract

Entry into a network industry is modeled focusing on consumers’ expectations formation through higher order beliefs. Equilibrium expectations are endogenous and depend on prices, acting as a coordination device among consumers. The model is able to account for aggressive pricing policies by the incumbent and by the entrant. Both exclusion and entry are possible outcomes (depending on parameter values). The threat of entry is beneficial to consumers, even when unsuccessful.

Lingua originale	English
pagine (da-a)	1-13
Numero di pagine	13
Rivista	THE B.E. JOURNAL OF ECONOMIC ANALYSIS & POLICY
Volume	8
Stato di pubblicazione	Pubblicato - 2008

Keywords

networks

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abstract = "Entry into a network industry is modeled focusing on consumers{\textquoteright} expectations formation through higher order beliefs. Equilibrium expectations are endogenous and depend on prices, acting as a coordination device among consumers. The model is able to account for aggressive pricing policies by the incumbent and by the entrant. Both exclusion and entry are possible outcomes (depending on parameter values). The threat of entry is beneficial to consumers, even when unsuccessful.",

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AB - Entry into a network industry is modeled focusing on consumers’ expectations formation through higher order beliefs. Equilibrium expectations are endogenous and depend on prices, acting as a coordination device among consumers. The model is able to account for aggressive pricing policies by the incumbent and by the entrant. Both exclusion and entry are possible outcomes (depending on parameter values). The threat of entry is beneficial to consumers, even when unsuccessful.

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