Competition between Networks: A Study of the Market for Yellow Pages

Boston University Industry Studies Project Working Paper No. 104

50 Pages Posted: 16 Feb 2002

See all articles by Marc Rysman

Marc Rysman

Boston University - Department of Economics

Date Written: September 9, 2002

Abstract

This paper estimates the importance of network effects in the market for Yellow Pages. I estimate three simultaneous equations: consumer demand for usage of a directory, advertiser demand for advertising and a publisher's first-order condition (derived from profit-maximizing behavior). Estimation shows that advertisers value consumer usage and that consumers value advertising, implying a network effect. I find that internalizing network effects would significantly increase surplus. As an application, I consider whether the market benefits from monopoly (which takes advantage of network effects) or oligopoly (which reduces market power). I find that a more competitive market is preferable.

Keywords: Network Effects, Discrete Choice Demand, Antitrust

JEL Classification: L1, L4

Suggested Citation

Rysman, Marc, Competition between Networks: A Study of the Market for Yellow Pages (September 9, 2002). Boston University Industry Studies Project Working Paper No. 104, Available at SSRN: https://ssrn.com/abstract=300450 or http://dx.doi.org/10.2139/ssrn.300450

Marc Rysman (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-3086 (Phone)
617-353-4449 (Fax)

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