Fulfilled-expectations Equilibria in Network Demand

Static demand models for homogeneous network goods give rise to fulfilled-expectations equilibrium demand (FEED) curves, which, contrary to normal demand curves, may be upward sloping at certain intervals. We analyze some, as yet unexplored, properties of the FEED curves. We spell out the one-shot non-cooperative game, the Nash equilibria of which constitute the FEED curve. We show that, in a network environment, pricing below marginal cost may be required to reach critical mass, and competition could represent an obstacle to network development rather than being its driving force.