Monopoly pricing with network externalities

@inproceedings{Cabral1994MonopolyPW,
  title={Monopoly pricing with network externalities},
  author={Lu{\'i}s M. B. Cabral and David J Salant and Glenn Woroch},
  year={1994}
}
How should a monopolist price a durable good or a new technology that is subject to network externalities? In particular, should the monopolist set a low ‘‘introductory price’’ to attract a ‘‘critical mass’’ of adopters? In this paper, we provide intuition as to when and why introductory pricing might occur in the presence of network externalities. Incomplete information about demand or asymmetric information about costs is necessary for introductory pricing to occur in equilibrium when… CONTINUE READING
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