Logo
Munich Personal RePEc Archive

Nonlinear Pricing with Network Externalities and Countervailing Incentives

Meng, Dawen and Tian, Guoqiang (2008): Nonlinear Pricing with Network Externalities and Countervailing Incentives.

[thumbnail of MPRA_paper_41212.pdf]
Preview
PDF
MPRA_paper_41212.pdf

Download (291kB) | Preview

Abstract

This paper considers the screening problem faced by a monopolist of a network good in a general setting. We demonstrate that the joint presence of asymmetric information and network externalities revise the "no distortion on the top" and "one-way distortion" principle. The pattern of consumption distortions crucially depends on the congestion of the network. It exhibits one-way distortion in un-congestible network and two-way distortion in congestible network. The countervailing incentives problem from potential entry threat is also analyzed. As the competitiveness of the outside competitors increases, the incumbent firm should adjust its nonlinear pricing scheme accordingly, which will distort the allocations of both types.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.