This paper investigates how switching costs affect product compatibility and market dynamics in network industries. A reduction in the switching cost makes the firms' products more attractive relative to the outside good, which diminishes the market expansion benefit of making products...

This paper investigates the importance of network effects in the demand for ethanol-compatible vehicles and the supply of ethanol fuel retailers. An indirect network effect, or positive feedback loop, arises in this context due to spatially-dependent complementarities in the availability of...

This paper studies a “market creating” firm that offers a matching environment, by charging an access fee, to a population of users who wish to form a match. We focus on an environment where users only observe a signal from their randomly assigned partner's type and the signal...

This paper studies a 'market creating' firm (platform) that offers a matching environment by charging an access fee to a population of high and low type users who wish to form a match. We focus on an environment where users only observe a signal of their randomly assigned partner's type and...

We study duopoly pricing in the market for mobile phone service, which features network externalities, switching costs, and consumer heterogeneity. We introduce a steady state approach that enables a tractable analysis without endgame effects. The model can generate a variety of testable...

We model a two-sided market with heterogeneous customers and two heterogeneous network effects. In our model, customers on each market side care differently about both the number and the type of customers on the other side. Examples of two-sided markets are online platforms or daily newspapers....

Online platforms, such as Google, Facebook, or Amazon, are constantly expanding their activities, while increasing the overlap in their service offering. In this paper, we study the scope and overlap of online platforms' activities, when they are endogenously determined. We model an expansion...

This paper provides a theory of quot;family network,quot; in contrast to quot;local externalities,quot; to explain the geographic concentration of industry. For many industries, one most important source of entrants is spinoffs, who typically locate near parent firms and benefit from knowledge...

This paper explores the incentives for, and the effects of, collusion in prices between two-sided platforms. We characterize the most profitable sustainable agreement when platforms collude on both sides of the market and when they collude on a single side of the market. Under two-sided...

We consider platform competition in the presence of small users and a usergroup. One platform enjoys a quality advantage and the other benefits from favorable beliefs. We study whether the group mitigates the users' coordination problem i.e., joining a low-quality platform because they believe...