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Optimal Monopoly Price Paths with Expanding Networks

Author

Listed:
  • Gabszewicz Jean

    (CORE – Université Catholique de Louvain)

  • Garcia Filomena

    (UECE – Technical University of Lisbon)

Abstract
In this paper, we survey the literature on optimal pricing of a monopolist operating on a network industry. We also describe explicitly the optimal path of prices for a monopolist facing an expanding demand due to the presence of network effects. The optimal path of prices appears as a function of the network effect intensity and horizon length. Prices are increasing over time and for very low network effect intensity, or very high horizon length, the monopolist will offer the good at zero price in the initial period.

Suggested Citation

  • Gabszewicz Jean & Garcia Filomena, 2007. "Optimal Monopoly Price Paths with Expanding Networks," Review of Network Economics, De Gruyter, vol. 6(1), pages 1-8, March.
    • Handle: RePEc:bpj:rneart:v:6:y:2007:i:1:n:3
    DOI: 10.2202/1446-9022.1109
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    Cited by:

    1. Laussel, Didier & Van Long, Ngo & Resende, Joana, 2015. "Network effects, aftermarkets and the Coase conjecture: A dynamic Markovian approach," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 84-96.
    2. Garcia Filomena, 2013. "When Should a Monopolist Improve Quality in a Network Industry?," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 381-414, September.
    3. Ngo Long, 2015. "Dynamic Games Between Firms and Infinitely Lived Consumers: A Review of the Literature," Dynamic Games and Applications, Springer, vol. 5(4), pages 467-492, December.

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