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Competition and investment in on-demand networking technology

机译:按需网络技术的竞争和投资

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Modern on-demand networking technologies (e.g., WiFi-Direct) improve users' networking experiences (e.g., enable them to connect to any WiFi enabled devices). Manufactures of wireless devices may choose to provide these technologies to make their products more appealing and charge a higher price. The perceived benefits from these technologies depend on how many other users are in the network, which we refer to as “positive network effect”. In this paper, we study such a scenario and develop a price-competition based model for the market, where device manufacturers may choose to invest in on-demand technology with positive network effect and consumers choose whether to participate in the market and which manufacturer to buy from. While the positive network effect can give some firms a competitive advantage, leading to a monopolistic market outcome, we show that market equilibrium always exists and the social welfare is larger when the network effect is strong enough. This is because although only the “best” firms have positive market shares at equilibrium, competition from other firms limits the best firms' actions. For a case study of linear demand and network effects, we have analytical characterizations of the equilibrium and show that competition drives firms to invest more on technology and set lower prices at equilibrium, which improves equilibrium social welfare. Numerical studies suggest that these observations may hold in more general settings.
机译:现代的按需联网技术(例如,WiFi-Direct)改善了用户的联网体验(例如,使他们能够连接到任何启用WiFi的设备)。无线设备制造商可能会选择提供这些技术,以使其产品更具吸引力并收取更高的价格。这些技术的可感知收益取决于网络中还有多少其他用户,我们称其为“正网络效应”。在本文中,我们研究了这种情况,并为市场建立了基于价格竞争的模型,在该模型中,设备制造商可以选择对网络产生积极影响的按需技术进行投资,而消费者可以选择是否参与市场以及由哪个制造商来参与。从购买。虽然积极的网络效应可以给一些公司带来竞争优势,从而导致垄断的市场结果,但我们证明,只要网络效应足够强,市场均衡就始终存在,社会福利也就更大。这是因为尽管只有“最佳”公司在均衡时具有正的市场份额,但与其他公司的竞争限制了最佳公司的行为。对于线性需求和网络效应的案例研究,我们具有均衡的分析特征,并表明竞争促使企业对技术进行更多投资,并在均衡时设定较低的价格,从而改善了均衡的社会福利。数值研究表明,这些观察结果可能适用于更一般的情况。

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