Competitive Strategies of Products with Network Externality

摘要

The initial market size plays an important part in customer's utility when durable goods with network externality are consumed. Considering initial market size, this study analyzed competition strategies between oligopolistic firms by using of Hotelling model and two-stage game. Results show that initial market size affects competition strategies and makes strategies are different with general products' strategies. It is forecasted that unequal initial market sizes will eventually lead to monopoly. Then, an empirical analysis is used to exemplify theory analysis.