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Dai Zusai
''Market size effects on long-run demand of a network good''
( 2015, Vol. 35 No.4 )
We consider optimal dynamic pricing under a network externality. We construct the demand dynamic of the network good from the aggregate best response dynamic of agents who have different adoption costs. When the distribution of adoption costs is convex, expansion of potential market inevitably enlarges long-run demand.
Keywords: entry game, platform, dynamic optimization, network externality, size effects, non-concavity
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
D4 - Market Structure and Pricing: General
Manuscript Received : May 07 2014 Manuscript Accepted : Dec 13 2015

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