Externalities of Microsoft network goods

Versioning information goods with network externalities

Positive externalities characterize the consumption of a majority class of information goods and services such as software, e-mail, and online content and services including virtual communities. We show that network externality is critical for the market segmentation and product line decisions of an information goods seller. With externality, a monopoly of multiple existing products offers exac...

On Fixed-Price Marketing for Goods with Positive Network Externalities

In this paper we discuss marketing strategies for goods that have positive network externalities, i.e., when a buyer’s value for an item is positively influenced by others owning the item. We investigate revenue-optimal strategies of a specific form where the seller gives the item for free to a set of users, and then sets a fixed price for the rest. We present a 1 2 -approximation for this prob...

Network Externalities and the Provision of Composite IT Goods Supporting the E-Commerce Infrastructure

Theoretical research on networks and technology standards suggests that network externalities, the additional value of a product or service resulting from an existing installed base, have strategic implications. This paper uses the WWW software market to empirically test the network externalities hypothesis in a market of composite goods. Among the findings is that vendors who provide both comp...

Durable Goods Monopoly with Network Externalities with Application to the PC Operating Systems Market

We analyze a model of multi-period monopoly in durable goods. Taking into consideration the special conditions of software markets, we assume that there are no used software markets and that manufacturers stop selling older software when they introduce a replacement model. We show that nominal as well as discounted (real) prices decrease over time but are above cost, thereby violating the Coase...

Survey of Methodologies for Valuing Externalities and Public Goods