Variable willingness to pay for network externalities with strategic standardization decisions

@inproceedings{Palma1996VariableWT,
  title={Variable willingness to pay for network externalities with strategic standardization decisions},
  author={Andr{\'e} de Palma and Luc Leruth},
  year={1996}
}
Abstract We propose a model of network externalities in which consumers are differentiated in their willingness to pay for the externality (but not for the basic quality). Firms play a two-stage game in which standardization is played in the first stage and quantities in the second stage. We show that competing firms prefer compatibility if they have a close to equal probability of becoming the largest under incompatibility. Incompatibility occurs otherwise and necessarily leads to asymmetric… CONTINUE READING

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