We propose a general framework for consumer demand in two-sided markets, modelling the way externalities between customer groups affect the price sensitivity of demand on both sides of the market. We define a measure for the strength of the externalities and establish the conditions for the...

“Freemium” product strategies—where a free basic version of a product is offered alongside a full “premium” paid version—are often used by companies to attempt to increase the size of their user base and benefit from network effects. However, there is limited empirical evidence of...

Mobile instant messaging (MIM) is currently one of the most influential areas of technology. MIM applications have experienced substantial growth in the number of users; however, research on consumer behavior regarding the use of these applications is relatively scarce. The present study seeks...

We study a nonlinear pricing problem of experience goods in dynamic environments where consumers' private information evolves stochastically over time, and their present types and/or quitting costs are affected by their past consumptions. Our model sheds some light on the pricing of addictive...

Network effects and standards competition introduce significant uncertainty into consumers' new-product adoption decisions, creating a substantial challenge to the success of innovating firms. While the literature has highlighted the importance of establishing a large installed-user base (the...

This paper evaluates empirically the effect of network externalities on individual behavior in the Russian retail payments market. Specifically, the effects of direct and indirect network externalities for cardholding and usage probabilities are examined. Using a representative sample of 1500...