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 |
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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