publication . Article . Other literature type . 2010

Tipping and Concentration in Markets with Indirect Network Effects

Jean-Pierre H. Dubé; Günter J. Hitsch; Pradeep K. Chintagunta;
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  • Published: 01 Mar 2010 Journal: SSRN Electronic Journal (eissn: 1556-5068, Copyright policy)
  • Publisher: Elsevier BV
Abstract
This paper develops a framework for measuring “tipping”---the increase in a firm's market share dominance caused by indirect network effects. Our measure compares the expected concentration in a market to the hypothetical expected concentration that would arise in the absence of indirect network effects. In practice, this measure requires a model that can predict the counterfactual market concentration under different parameter values capturing the strength of indirect network effects. We build such a model for the case of dynamic standards competition in a market characterized by the classic hardware/software paradigm. To demonstrate its applicability, we calib...
Subjects
free text keywords: dynamic oligopoly, indirect network effects, tipping, standards war, high technology, Marketing, Business and International Management, Microeconomics, Counterfactual thinking, Industrial organization, Penetration pricing, Market concentration, Market share, Economics, Supply side, Durable good
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publication . Article . Other literature type . 2010

Tipping and Concentration in Markets with Indirect Network Effects

Jean-Pierre H. Dubé; Günter J. Hitsch; Pradeep K. Chintagunta;