Focality Advantage in Platform CompetitionJournal of Economics & Management Strategy (2019)
We consider a methodology for studying how beliefs shape platform competition, based on the notion of a partial focality. The concept of focality is useful for modeling platform competition when the presence of network effects results in multiple equilibria for a certain set of prices. We illustrate how to implement this methodology in both static and dynamic competition between platforms that differ in their basic quality. The initial degree of focality affects the ability of the high-quality platform to win the market. Yet, dynamic considerations may have positive or negative effect on this ability.
- Platform Competition,
- Network Effects,
- Coordination Game
Citation InformationHanna Halaburda and Yaron Yehezkel. "Focality Advantage in Platform Competition" Journal of Economics & Management Strategy Vol. 28 (2019) p. 49 - 59
Available at: http://works.bepress.com/halaburda/39/