This paper examines tipping in the Armstrong (2006) two-sided market model. By adding simple cost asymmetries to the original model, we show that the model is quite robust to dierences in network size and deviations from 50-50 market share. It well represents situations where asymmetries...

This Paper analyzes the pric ing of transit traffic in wireless peer-to-peer networks using the concepts of direct and indirect network externalities. We first establish that without any pricing mechanism, congestion externalities overwhelm other network effects in a wireless data network. We...

Broadband “open access” regulation mandates openness of conduits (e.g. upgraded cable television) to service providers (e.g. America Online), but policy discussion often suggests that the ultimate goal is openness to advanced content (streaming video, interactive e-commerce, etc.). We define...

In platform-component systems with indirect network effects, some components are so popular with consumers that they have strong bargaining positions and can be regarded as “must-have” from the point of view of the platform. For example, ESPN is a must-have component of cable TV platforms....

In many capacity-intensive industries (e.g. electricity, bandwidth), exchanges allow firms to buy and sell wholesale capacity before selling on the retail market. This allows firms to smooth demand shocks, but it also raises suspicions that exchanges facilitate tacit collusion to limit capacity...

We document entry and capacity expansion in US long-distance fiber-optic networks before and during the “telecom boom.” We disentangle the many swaps and leases between networks in order to measure owned route miles versus route miles shared with other carriers. Entry appears much more...

We formalize and extend George Stigler’s famous article “The division of labor is limited by the extent of the market.” We emphasize economies of scale in intermediate goods production as a determinant of firm boundaries and vertical control. We show that there are potential coordination...