IDEAS home Printed from https://ideas.repec.org/a/taf/ijecbs/v14y2007i1p85-97.html
   My bibliography  Save this article

Price Strategies and Compatibility in Digital Networks

Author

Listed:
  • Øystein Foros

Abstract

We analyze competition between two horizontally differentiated network providers. New technologies help the providers to collect consumer-specific information, and such technologies increase the providers' ability to use price discrimination. One example is the mobile providers' choice of investing into third generation mobile systems (3G). Compared to the current 2G systems (GSM), 3G gives the providers more accurate customer specific information (e.g. with respect to customers' location at any time). Since new technologies give the opportunity to implement price discrimination, an interesting question is how the price strategies (price discrimination or not) affect the incentives to unilaterally establish a walled garden where the rival's customers have imperfect access. The main message of the paper is that walled garden strategies are more likely when firms use price discrimination than when they all use linear pricing.

Suggested Citation

  • Øystein Foros, 2007. "Price Strategies and Compatibility in Digital Networks," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(1), pages 85-97.
    • Handle: RePEc:taf:ijecbs:v:14:y:2007:i:1:p:85-97
    DOI: 10.1080/13571510601097157
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/10.1080/13571510601097157
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13571510601097157?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.

    References listed on IDEAS

    as
    1. Fabio Manenti & Ernesto Somma, 2008. "One-Way Compatibility, Two-Way Compatibility and Entry in Network Industries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(3), pages 301-322.
    2. Shy,Oz, 2001. "The Economics of Network Industries," Cambridge Books, Cambridge University Press, number 9780521805001.
    3. Nir Vulkan, 2003. "Introduction to The Economics of E-Commerce: A Strategic Guide to Understanding and Designing the Online Marketplace," Introductory Chapters, in: The Economics of E-Commerce: A Strategic Guide to Understanding and Designing the Online Marketplace, Princeton University Press.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fabio Manenti & Ernesto Somma, 2008. "One-Way Compatibility, Two-Way Compatibility and Entry in Network Industries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(3), pages 301-322.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Jiawei, 2018. "Switching costs and network compatibility," International Journal of Industrial Organization, Elsevier, vol. 58(C), pages 1-30.
    2. Fabio Manenti & Ernesto Somma, 2008. "One-Way Compatibility, Two-Way Compatibility and Entry in Network Industries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(3), pages 301-322.
    3. Paul DiMaggio & Joseph Cohen, 2003. "Information Inequality and Network Externalities: A Comparative Study of the Diffusion of Television and the Internet," Working Papers 36, Princeton University, School of Public and International Affairs, Center for Arts and Cultural Policy Studies..
    4. Fan-Chen Tseng & Kuang-Cheng Andy Wang, 2011. "Compatibility Strategies For An Asymmetric Duopoly Considering Network Effects And Market Shares," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 8(04), pages 615-634.
    5. Davide Consoli & Pier Paolo Patrucco, 2011. "Complexity and the Coordination of Technological Knowledge: The Case of Innovation Platforms," Chapters, in: Handbook on the Economic Complexity of Technological Change, chapter 8 Edward Elgar Publishing.
    6. Dutta, Dilip & Otsuka, Kozo, 2004. "Knowledge Spillover from Information and Communication Technology: A Comparative Study of Australia, Japan, South Korea and Taiwan," Working Papers 8, University of Sydney, School of Economics.
    7. Christian Dahl Winther, 2007. "Optimal research effort and product differentiation in network industries," Economics Working Papers 2007-19, Department of Economics and Business Economics, Aarhus University.
    8. Slowak, André P., 2009. "Market fields structure & dynamics in industrial automation," FZID Discussion Papers 02-2009, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    9. Johannes M. Bauer & Michael Latzer, 2016. "The economics of the Internet: an overview," Chapters, in: Johannes M. Bauer & Michael Latzer (ed.), Handbook on the Economics of the Internet, chapter 1, pages 3-20, Edward Elgar Publishing.
    10. Jean Gabszewicz & Victor Ginsburgh & Shlomo Weber, 2011. "Bilingualism and Communicative Benefits," Annals of Economics and Statistics, GENES, issue 101-102, pages 271-286.
    11. repec:zbw:bofrdp:2005_019 is not listed on IDEAS
    12. Victor Ginsburgh & Jacques Melitz & Farid Toubal, 2014. "Foreign Language Learning : An Econometric Analysis," Working Papers 2014-21, Center for Research in Economics and Statistics.
    13. Kauko, Karlo, 2007. "Interlinking securities settlement systems: A strategic commitment?," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 2962-2977, October.
    14. Nicholas Economides & Brian Viard, 2003. "Pricing of Complementary Goods and Network Effects," Working Papers 03-12, New York University, Leonard N. Stern School of Business, Department of Economics.
    15. Kari Kemppainen, 2004. "Competition and regulation in European retail payment systems," Microeconomics 0404008, University Library of Munich, Germany.
    16. Herguera-García, Iñigo & Aguilar-Barceló, José G., 2004. "El papel de las tarifas de interconexión en las industrias en red [The role of interconnection charges in network industries]," MPRA Paper 4733, University Library of Munich, Germany, revised Jan 2004.
    17. Heggedal, Tom-Reiel & Helland, Leif & Neset Joslin, Knut-Eric, 2018. "Should I Stay or should I Go? Bandwagons in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 86-97.
    18. Clasen, Michael, 2004. "Success Factors of Digital Markets in the Agricultural and Food Industry," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58394, Australian Agricultural and Resource Economics Society.
    19. Hasan, Iftekhar & Schmiedel, Heiko, 2004. "Networks and equity market integration: European evidence," International Review of Financial Analysis, Elsevier, vol. 13(5), pages 601-619.
    20. Feng-Shang Wu & Chia-Chang Tsai, 2022. "A Framework of the Value Co-Creation Cycle in Platform Businesses: An Exploratory Case Study," Sustainability, MDPI, vol. 14(9), pages 1-18, May.
    21. Moen, Espen R. & Riis, Christian & Fjeldstad, Øystein, 2010. "Competition with Local Network Externalities," CEPR Discussion Papers 7778, C.E.P.R. Discussion Papers.

    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:taf:ijecbs:v:14:y:2007:i:1:p:85-97. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIJB20 .

    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.