Entry into a Network Industry: Consumers' Expectations and Firms' Pricing Policies

B.E. Journal of Economic Analysis & Policy, Vol. 8, No. 1, 2008

Posted: 8 Sep 2008

See all articles by Angelo S. Baglioni

Angelo S. Baglioni

Catholic University of the Sacred Heart of Milan

Date Written: September 5, 2008

Abstract

Entry into a network industry is modeled, focusing on consumers' expectations formation. Equilibrium expectations are endogenous and they depend on prices, acting as a coordination device among consumers. The model is able to account for aggressive pricing policies by the incumbent and by the entrant. Both exclusion and entry are possible outcomes (depending on parameter values). The threat of entry is beneficial to consumers, even when unsuccessful.

Keywords: networks, entry, expectations

JEL Classification: D42, D84, L12, L14

Suggested Citation

Baglioni, Angelo, Entry into a Network Industry: Consumers' Expectations and Firms' Pricing Policies (September 5, 2008). B.E. Journal of Economic Analysis & Policy, Vol. 8, No. 1, 2008, Available at SSRN: https://ssrn.com/abstract=1263902

Angelo Baglioni (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, n.1
Milano, 20123
Italy
390272344024 (Phone)
390272342781 (Fax)

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