Product differentiation and Network Optimality

Fairness in network optimal flow control: optimality of product forms

In this paper we consider the problem of optimal flow control in a multiclass telecommunications environment where each user (or class) desires to optimize its performance while being fair to the other users (classes). The Nash arbitration scheme from game theory is shown to be a suitable candidate for a fair, optimal operation point in the sense that it satisfies certain axioms of fairness and...

Vertical Product Differentiation, Network Competition and Regulation of Connectivity

Abstract: In this paper competition between two network firms is analysed under two alternative regulatory regimes: a global connectivity regulation (GCR) and an efficient component pricing regulation (ECPRe). Whereas a GCR imposes a full quality of reciprocal interconnection, firms will choose vertical product differentiation in order to lower price competition, while under a ECPRe they will c...

Text-Based Network Industries and Endogenous Product Differentiation

All us We study how firms differ from their competitors using new time-varying measures of product similarity based on text-based analysis of firm 10-K product descriptions. This year-by-year set of product similarity measures allows us to generate a new set of industries in which firms can have their own distinct set of competitors. Our new sets of competitors explain specific discussion of hi...

Copyright and Product Differentiation

Open Standard Compatibility: Network Externalities versus Product Differentiation∗

We study firms compatibility decisions in a horizontal differentiation model with network externalities. By means of a nested multinomial logit demand structure, we describe the trade-off between network externalities and product differentiation. Simple and general results are derived, which hold for any finite number of firms and which account for any functional form of the externality functio...