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The Economics of Networks Author info | Abstract | Publisher info | Download info | Related research | Statistics Nicholas Economides () (Stern School of Business, New York University )
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I analyze the salient features of networks and point out the similarities between the economic structure of networks and the structure of vertically related industries. The analysis focuses on positive consumption and production externalities, commonly called network externalities. I discuss their sources and their effects on pricing and market structure. I distinguish between results that do not depend on the underlying industry microstructure (the "macro" approach) and those that do (the "micro" approach). I analyze the issues of compatibility, coordination to technical standards, interconnection and interoperability, and their effects on pricing and quality of services and on the value of network links in various ownership structures. I also briefly discuss the issue of interconnection fees for bottleneck facilities.
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Article provided by Department of Economics, Universidade Federal de Pernambuco in its journal Brazilian Electronic Journal of Economics .
Volume (Year): 1 (1997)
Issue (Month): 0 (December)
Pages:
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Handle: RePEc:bej:issued:v:1:y:1997:i:0:economidesNote: Reprinted with permission from the International Journal of Industrial Organization, Vol. 14, N. 6 pp 670-699, 1996. Elsevier Science.Contact details of provider: Postal: Av Prof. Moraes Rego, 1235 CEP: 50670-420, Recife - PE Email: Web page: http://www.beje.decon.ufpe.br/ More information through EDIRC
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For technical questions regarding this item, or to correct its listing, contact: (Jose Ricardo Nogueira).
Keywords: Networks ; Market Structure ; Externalidades ; Other versions of this item:
Find related papers by JEL classification: L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.:
Joseph Farrell and Garth Saloner., 1988.
"Coordination through Committees and Markets ,"
Economics Working Papers
8864, University of California at Berkeley.
Other versions: Jeffrey Rohlfs, 1974.
"A Theory of Interdependent Demand for a Communications Service ,"
Bell Journal of Economics ,
The RAND Corporation, vol. 5(1), pages 16-37, Spring.
[Downloadable!] (restricted)
Dybvig, Philip H. & Spatt, Chester S., 1983.
"Adoption externalities as public goods ,"
Journal of Public Economics ,
Elsevier, vol. 20(2), pages 231-247, March.
[Downloadable!] (restricted)
Garbade, Kenneth D & Silber, William L, 1979.
"Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and Liquidity Risk ,"
Journal of Finance ,
American Finance Association, vol. 34(3), pages 577-93, June.
[Downloadable!] (restricted)
Hart, O. & Tirole, J., 1990.
"Vertical Integration And Market Foreclosure ,"
Working papers
548, Massachusetts Institute of Technology (MIT), Department of Economics.
Nicholas Economides & Robert A. Schwartz,, .
"Equity Trading Practices and Market Structure: Assessing Asset Managers' Demand for Immediacy ,"
Financial Networks
9508, Economics of Networks.
[Downloadable!]
Other versions: Church, Jeffrey & Gandal, Neil, 1992.
"Network Effects, Software Provision, and Standardization ,"
Journal of Industrial Economics ,
Blackwell Publishing, vol. 40(1), pages 85-103, March.
[Downloadable!] (restricted)
Nicholas Economides & Lawrence J. White, 1997.
"Access and Interconnection Pricing: How Efficient is the Efficient Component Pricing Rule? ,"
Industrial Organization
9701003, EconWPA.
[Downloadable!]
Other versions: Katz, Michael L & Shapiro, Carl, 1986.
"Product Compatibility Choice in a Market with Technological Progress ,"
Oxford Economic Papers ,
Oxford University Press, vol. 38(0), pages 146-65, Suppl. No.
[Downloadable!] (restricted)
Diamond, Peter A, 1982.
"Aggregate Demand Management in Search Equilibrium ,"
Journal of Political Economy ,
University of Chicago Press, vol. 90(5), pages 881-94, October.
[Downloadable!] (restricted)
Other versions: Farrell, Joseph & Saloner, Garth, 1992.
"Converters, Compatibility, and the Control of Interfaces ,"
Journal of Industrial Economics ,
Blackwell Publishing, vol. 40(1), pages 9-35, March.
[Downloadable!] (restricted)
Other versions: Matutes, Carmen & Regibeau, Pierre, 1989.
"Standardization across Markets and Entry ,"
Journal of Industrial Economics ,
Blackwell Publishing, vol. 37(4), pages 359-71, June.
[Downloadable!] (restricted)
Cabral, Luis M. B., 1990.
"On the adoption of innovations with 'network' externalities ,"
Mathematical Social Sciences ,
Elsevier, vol. 19(3), pages 299-308, June.
[Downloadable!] (restricted)
Nicholas Economides, 1994.
"How to Enhance Market Liquidity ,"
Working Papers
94-03, New York University, Leonard N. Stern School of Business, Department of Economics.
[Downloadable!]
Other versions: Farrell, Joseph & Saloner, Garth, 1986.
"Standardization and variety ,"
Economics Letters ,
Elsevier, vol. 20(1), pages 71-74.
[Downloadable!] (restricted)
Dudey, Marc, 1990.
"Competition by Choice: The Effect of Consumer Search on Firm Location Decisions ,"
American Economic Review ,
American Economic Association, vol. 80(5), pages 1092-1104, December.
[Downloadable!] (restricted)
Church, J. & Gandal, N., 1992.
"Integration, Complementary Products and Variety ,"
Papers
3-92, Tel Aviv.
Other versions:
Church, Jeffrey & Gandal, Neil, 1992.
"Integration, Complementary Products, and Variety ,"
Journal of Economics & Management Strategy ,
Blackwell Publishing, vol. 1(4), pages 651-75, Winter.
Economides, Nicholas & Siow, Aloysius, 1988.
"The Division of Markets is Limited by the Extent of Liquidity (Spatial Competition with Externalities) ,"
American Economic Review ,
American Economic Association, vol. 78(1), pages 108-21, March.
[Downloadable!] (restricted)
David, Paul A, 1985.
"Clio and the Economics of QWERTY ,"
American Economic Review ,
American Economic Association, vol. 75(2), pages 332-37, May.
[Downloadable!] (restricted)
Nicholas Economides, .
"Network Economics with Application to Finance ,"
Financial Networks
_004, Economics of Networks.
[Downloadable!]
Matutes, Carmen & Regibeau, Pierre, 1992.
"Compatibility and Bundling of Complementary Goods in a Duopoly ,"
Journal of Industrial Economics ,
Blackwell Publishing, vol. 40(1), pages 37-54, March.
[Downloadable!] (restricted)
Economides, Nicholas & Salop, Steven C, 1992.
"Competition and Integration among Complements, and Network Market Structure ,"
Journal of Industrial Economics ,
Blackwell Publishing, vol. 40(1), pages 105-23, March.
[Downloadable!] (restricted)
Economides, Nicholas, 1989.
"Desirability of Compatibility in the Absence of Network Externalities ,"
American Economic Review ,
American Economic Association, vol. 79(5), pages 1165-81, December.
[Downloadable!] (restricted)
Katz, Michael L & Shapiro, Carl, 1994.
"Systems Competition and Network Effects ,"
Journal of Economic Perspectives ,
American Economic Association, vol. 8(2), pages 93-115, Spring.
[Downloadable!] (restricted)
Nicholas Economides & Robert Schwartz,, .
"Electronic Call Market Trading ,"
Financial Networks
_001, Economics of Networks.
[Downloadable!]
Other versions: Joseph Farrell and Garth Saloner., 1986.
"Competition, Compatibility and Standards: The Economics of Horses, Penguins and Lemmings ,"
Economics Working Papers
8610, University of California at Berkeley.
Liebowitz, S J & Margolis, Stephen E, 1990.
"The Fable of the Keys ,"
Journal of Law & Economics ,
University of Chicago Press, vol. 33(1), pages 1-25, April.
Jaskold Gabszewicz, J. & Thisse, J. -F., 1979.
"Price competition, quality and income disparities ,"
Journal of Economic Theory ,
Elsevier, vol. 20(3), pages 340-359, June.
[Downloadable!] (restricted)
Nicholas Economides & Lawrence J. White, 1993.
"One-Way Networks, Two-Way Networks, Compatibility, and Antitrust ,"
Working Papers
93-14, New York University, Leonard N. Stern School of Business, Department of Economics.
[Downloadable!]
Katz, Michael L & Shapiro, Carl, 1986.
"Technology Adoption in the Presence of Network Externalities ,"
Journal of Political Economy ,
University of Chicago Press, vol. 94(4), pages 822-41, August.
[Downloadable!] (restricted)
Carmen Matutes & Pierre Regibeau, 1988.
""Mix and Match": Product Compatibility without Network Externalities ,"
RAND Journal of Economics ,
The RAND Corporation, vol. 19(2), pages 221-234, Summer.
[Downloadable!] (restricted)
Encaoua, D. & Moreaux, M. & Perrot, A., 1992.
"Demand-Side Network Effect in Airline Markets ,"
Papiers d'Economie Mathématique et Applications
92.28, Université Panthéon-Sorbonne (Paris 1).
Howitt, Peter & McAfee, R Preston, 1988.
"Stability of Equilibria with Externalities ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 103(2), pages 261-77, May.
[Downloadable!] (restricted)
Bonanno, Giacomo & Vickers, John, 1988.
"Vertical Separation ,"
Journal of Industrial Economics ,
Blackwell Publishing, vol. 36(3), pages 257-65, March.
[Downloadable!] (restricted)
Church, J. & Gandal, N., 1991.
"Complementary Network Externalities and Technological Adoption ,"
Papers
5-91, Tel Aviv.
Other versions: Shaked, Avner & Sutton, John, 1982.
"Relaxing Price Competition through Product Differentiation ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 49(1), pages 3-13, January.
[Downloadable!] (restricted)
De Bijl, P.W.J. & Goyal, S., 1992.
"Technological Change in Markets with Network Externalities ,"
Papers
9233, Tilburg - Center for Economic Research.
Other versions: Nicholas Economides & Charles Himmelberg, 1995.
"Critical Mass and Network Size with Application to the US Fax Market ,"
Working Papers
95-11, New York University, Leonard N. Stern School of Business, Department of Economics.
[Downloadable!]
Economides, Nicholas, 1996.
"Network externalities, complementarities, and invitations to enter ,"
European Journal of Political Economy ,
Elsevier, vol. 12(2), pages 211-233, September.
[Downloadable!] (restricted)
Other versions: Nicholas Economides, 1993.
"Mixed Bundling in Duopoly ,"
Working Papers
93-29, New York University, Leonard N. Stern School of Business, Department of Economics.
[Downloadable!]
Nicholas Economides, 1994.
"Quality Choice and Vertical Integration ,"
Working Papers
94-22, New York University, Leonard N. Stern School of Business, Department of Economics.
[Downloadable!]
Other versions: Garbade, Kenneth D & Silber, William L, 1976.
"Price Dispersion in the Government Securities Market ,"
Journal of Political Economy ,
University of Chicago Press, vol. 84(4), pages 721-40, August.
[Downloadable!] (restricted)
Katz, Michael L & Shapiro, Carl, 1992.
"Product Introduction with Network Externalities ,"
Journal of Industrial Economics ,
Blackwell Publishing, vol. 40(1), pages 55-83, March.
[Downloadable!] (restricted)
Mark Armstrong & Simon Cowan & John Vickers, 1994.
"Regulatory Reform: Economic Analysis and British Experience ,"
MIT Press Books ,
The MIT Press,
edition 1, volume 1, number 0262510790.
Nicholas Economides & Fredrick Flyer, 1995.
"Technical Standards Coalitions for Network Goods ,"
Working Papers
95-12, New York University, Leonard N. Stern School of Business, Department of Economics.
Economides, Nicholas & White, Lawrence J., 1994.
"Networks and compatibility: Implications for antitrust ,"
European Economic Review ,
Elsevier, vol. 38(3-4), pages 651-662, April.
[Downloadable!] (restricted)
Nicholas Economides & Jeff Heisler, 1994.
"Equilibrium Fee Schedules in a Monopolist Call Market ,"
Working Papers
94-15, New York University, Leonard N. Stern School of Business, Department of Economics.
[Downloadable!]
Other versions:
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