IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v22y2022i2p649-668n4.html
   My bibliography  Save this article

Endogenous Expectations Management with Network Effects: A Note

Author

Listed:
  • Choi Kangsik

    (Graduate School of International Studies, Pusan National University, Busandaehak-ro 63 beon-gil 2, Geumjeong-gu, Pusan 46241, Republic of Korea)

  • Lim Seonyoung

    (Department of Economics, Mokpo National University, 1666 Yeongsan-ro, Cheonggye-myeon, Muan-gun 58554, Jeollanam-do, Republic of Korea)

Abstract

We examine the endogenous choice of commitment device to consumers’ expectations with network effects. Under Cournot competition, we show that choosing commitment to expectations for each firm is a dominant strategy regardless of the strength of network effects. However, under Bertrand competition, three types of commitment with both/no commitment/multiple emerge in equilibrium depending on the strength of network effects. Thus, we obtain different Pareto efficiency between Bertrand and Cournot competition, depending on the intensity of competition.

Suggested Citation

  • Choi Kangsik & Lim Seonyoung, 2022. "Endogenous Expectations Management with Network Effects: A Note," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 22(2), pages 649-668, June.
    • Handle: RePEc:bpj:bejtec:v:22:y:2022:i:2:p:649-668:n:4
    DOI: 10.1515/bejte-2021-0046
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejte-2021-0046
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejte-2021-0046?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    expectations; commitment; network effect; Bertrand; Cournot;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:22:y:2022:i:2:p:649-668:n:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.