http://hdl.handle.net/2451/28333 Networks, Electronic Commerce, and Telecommunications Search the Channel search http://archive.nyu.edu/simple-search http://hdl.handle.net/2451/31375 Title: xty Wed, 14 Dec 2011 21:21:03 GMT http://hdl.handle.net/2451/28521 Title: Word of Mouth and Taste Matching: A Theory of the Long Tail<br/><br/>Hervas-Drane, Andres - Columbia University and Universitat Pompeu Fabra<br/><br/>Abstract: I present a model to assess the impact of demand-side factors on theconcentration of sales within large product assortments. Consumers facea search problem within an assortment of horizontally differentiatedproducts supplied by a monopolist. They may search for a product matchby drawing products from the assortment or by seeking word of mouthrecommendations from other consumers. Product evaluations prior topurchase and word of mouth are shown to arise endogenously, and increasethe concentration of sales. I show that taste matching mechanisms suchas recommender systems, which allow consumers to obtain productrecommendations from others with similar preferences, reduce salesconcentration by generating a long tail effect, an increase in the tailof the sales distribution. Insights are derived on the mechanismsdriving concentration in artistic markets and their strategicimplications for the firm. The model is suited for experience goodmarkets such as music, cinema, literature and video game entertainment. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/31451 Title: Wireless Carriers&rsquo; Exclusive Handset Arrangements: An EmpiricalLook at the iPhone<br/><br/>K. Chintagunta, Pradeep; Liu, Hongju; Zhu, Ting<br/><br/>Abstract: Since the Apple iPhone&rsquo;s first launch in 2007 with an exclusivearrangement with AT&amp;T, it has garnered overwhelmingly positiveresponses from consumers and from the media. With its success, exclusivecontracts between handset makers and wireless carriers have come underincreasing scrutiny by regulators and lawmakers. Such practices havebeen criticized by regulators, by the media, and by&ldquo;locked-out&rdquo; consumers, due to the fact that a consumer hasto subscribe to a particular service provider if he or she stronglyprefers one handset to others. In this paper, we empirically examine theimpact of handset exclusivity arrangements on consumer welfare. First westudy consumers&rsquo; purchase decisions in mobile services thatinclude the choice of a handset and of a service provider. We do so bycombining survey data on consumers&rsquo; purchase decisions withsupplemented data on prices and features of common handsets. Next,assuming a Stackelberg leader-follower relationship between the handsetmanufacturers and the service providers, and using our demand estimates,we recover the marginal costs for the players in the market. We thensimulate what would have happened in the counterfactual scenario whenthe iPhone is available from all carriers. Our results suggest that, ifwe take into account price adjustments from handset manufacturers andservice providers in response to the change in market structure,consumer welfare will increase by $326 million without the exclusivearrangement. We view our analysis as a starting point to a more completecharacterization of consumer behavior and the complex relationshipsamong players in this industry. Tue, 17 Jan 2012 22:03:19 GMT http://hdl.handle.net/2451/29851 Title: Why Imposing New Tolls on Third-Party Content and Applications ThreatensInnovation and Will Not Improve Broadband Providers' Investment<br/><br/>Economides, Nicholas - NYU Stern School of Business<br/><br/>Abstract: In this paper, I consider the impact of a departure from this currentsystem. I examine the possible impact of last-mile broadband providers'imposing &quot;termination fees&quot; on third-party content providersor application providers to reach end-users. Broadband providers wouldengage in paid prioritization arrangements &ndash; that is, applicationand content providers could pay the broadband provider to have theirtraffic prioritized over competitors' services. I argue that thesearrangements would create inefficiency in the market and harminnovation. Because the last mile access broadband market isconcentrated and consumers face switching costs, these concerns areparticularly significant. Broadband providers insist that imposingthese new charges will greatly improve network investment, and thusthese charges are beneficial. I argue that this is not the case.Possible higher revenues from discrimination may simply be returned toshareholders and not invested. Additionally, evidence suggests networksinvest more under non-discrimination requirements, and paidprioritization schemes would divert money towards managing scarcityinstead of expanding capacity. Paid prioritization could even create anincentive for broadband providers to create congestion to increase theprice of prioritized service. Thu, 29 Oct 2009 22:58:59 GMT http://hdl.handle.net/2451/31443 Title: Whose and What Chatter Matters? The Impact of Tweets on Movie Sales<br/><br/>Liu, Yizao; Rui, Huaxia; Whinston, Andrew<br/><br/>Abstract: Social broadcasting networks such as Twitter in the U.S. and\Weibo&quot; in China are transforming the way online word-of-mouth(WOM) is disseminated and consumed in the digital age. We investigatewhether and how Twitter WOM aects movie sales by estimating a dynamicpanel data model using publicly available data and well known machinelearning algorithms. We nd that chatter on Twitter does matter, however,the magnitude and direction of the eect depends on whom the WOM is fromand what the WOM is about. Measuring Twitter users' in uence by how manyfollowers they have, we nd that the eect of WOM from more in uentialusers is signicantly larger than that from less in uential users. Insupport of some recent ndings about the importance of WOM valence onproduct sales, we also nd that positive Twitter WOM increases moviesales while negative WOM decreases them. Interestingly, we nd that thestrongest eect on movie sales comes from those tweets where the authorsexpress their intention to watch a certain movie. We attribute this tothe dual eects of such intention tweets on movie sales: the direct eectthrough the WOM author's own purchase behavior, and the indirect eectthrough either the awareness eect or the persuasive eect of the WOM onits recipients. Our ndings provide new perspectives to understand theeect of WOM on product sales and have important managerial implications.For example, our study reveals the potential values of monitoringpeople's intention and sentiment on Twitter and identifying in uentialusers for companies wishing to harness the power of social broadcasting networks. Tue, 17 Jan 2012 21:47:42 GMT http://hdl.handle.net/2451/29459 Title: Who's who in networks. Wanted: the key group<br/><br/>Temurshoev, Umed - University of Groningen<br/><br/>Abstract: Ballester, Calv ́o-Armengol, and Zenou (2006, Econometrica, 74/5, pp.1403-17) show that in a network game with local payoffcomplementarities, together with global uniform payoff substitutabilityand own concavity effects, the intercentrality measure identifies thekey player - a player who, once removed, leads to the optimal change inoverall activity. In this paper we search for the key group in suchnetwork games, whose members are, in general, different from the playerswith the highest individual intercentralities. Thus the quest for asingle target is generalized to a group selection problem targeting anarbitrary number of players, where the key group is identified by agroup intercentrality measure. We show that the members of a key groupare rather nonredundant actors, i.e., they are largely heterogenous intheir patterns of ties to the third parties. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/29483 Title: Who thinks about the competition? Managerial ability and strategicentryin US local telephone markets<br/><br/>Goldfarb, Avi - University of Toronto; Xiao, Mo - University of Arizona<br/><br/>Abstract: This paper examines how manager and firm characteristics relate to entrydecisions in US local telephone markets. To do so, it develops astructural econometric model that allows managers to be heterogeneous intheir ability to correctly conjecture competitor behavior. The modeladapts Camerer, Ho, and Chong's (2004) Cognitive Hierarchy model to areal-world setting. We observe the industry in 1998, shortly after theTelecommunications Act of 1996 opened up the market. We find that olderfirms with older, more experienced managers have higher estimated levelsof strategic ability. Managers with degrees in economics or business,and managers with graduate degrees, also have higher estimated levels ofstrategic ability. We find no evidence that university quality isrelated to ability. We repeat this exercise using data from 2000, 2002,and 2004. While the core results do not change, the overall level ofmeasured strategic ability increases substantially by 2004. Theestimates of strategic ability are also correlated with survival: thosefirms with lower estimated levels of ability are more likely to exit theindustry early. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/29457 Title: Who Benefits from Online Privacy?<br/><br/>Taylor, Curtis R. - Duke University; Wagman, Liad - Duke University<br/><br/>Abstract: When firms can identify their past customers, they may use informationabout purchase histories in order to price discriminate. We present amodel with a monopolist and a continuum of heterogeneous consumers,where consumers can opt out from being identified, possibly at a cost.We find that when consumers can costlessly opt out, they allindividually choose privacy, which results in the highest profit for themonopolist. In fact, all consumers are better off when opting out iscostly. When valuations are uniformly distributed, social surplus isnon-monotonic in the cost of opting out and is highest when opting outis prohibitively costly. We introduce the notion of a privacy gatekeeper&mdash; a third party that is able to act as a privacy conduit and setthe cost of opting out. We prove that the privacy gatekeeper onlycharges the firm in equilibrium, making privacy costless to consumers. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/28461 Title: When Proof of Work Works<br/><br/>Liu, Debin - Indiana University; Camp, L. Jean - Indiana University<br/><br/>Abstract: Proof of work (POW) is a set of cryptographic mechanisms which increasethe cost of initiating a connection. Currently recipients bear as muchor more cost per connection as initiators. The design goal of POW is toreverse the economics of connection initiation on the Internet. In thecase of spam, the first economic examination of POW argued that POWwould not, in fact, work. This result was based on the difference inproduction cost between legitimate and criminal enterprises. Weillustrate that the difference in production costs enabled by zombiesdoes not remove the efficacy of POW when work requirements are weighted.We illustrate that POW will work with a reputation system modeled on thesystems currently used by commercial anti-spam companies. We alsodiscuss how the variation on POW changes the nature of correspondingproofs from token currency to a notational currency. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/29854 Title: When Does a Platform Create Value by Limiting Choice?<br/><br/>Casadesus-Masanell, Ramon - Harvard Business School; Halaburda, Hanna - Harvard Business School<br/><br/>Abstract: We present a theory for why it might be rational for a platform to limitthe number of applications available on it. Our model is based on theobservation that even if users prefer application variety, applicationsoften also exhibit direct network effects. When there are direct networkeffects, users prefer to consume the same applications to benefit fromconsumption complementarities. We show that the combination ofpreference for variety and consumption complementarities gives rise to(i) a commons problem (users have an incentive to consume moreapplications than the social optimum to better satisfy their preferencefor variety); (ii) an equilibrium selection problem (consumptioncomplementarities often lead to multiple equilibria); and (iii) acoordination problem (lacking perfect foresight, it is unlikely thatusers will end up buying the same set of applications). The analysisshows that the platform can resolve these problems by limiting thenumber of applications available. By limiting choice, the platform maycreate new equilibria (including the socially efficient allocation),destroy Pareto-dominated equilibria, and reduce the severity of thecoordination problem faced by users. Thu, 29 Oct 2009 22:58:59 GMT http://hdl.handle.net/2451/28477 Title: What&rsquo;s It To You? A Survey of Online Privacy Concerns and Risks<br/><br/>Tsai, Janice - Carnegie Mellon University; Cranor, Lorrie - Carnegie Mellon University; Acquisti, Alessandro - Carnegie Mellon University; Fong, Christina - Carnegie Mellon University<br/><br/>Abstract: Finding information about privacy practices can be difficult: privacypolicies often do not present this information in an accessible way.People typically do not know how or for what purpose their personalinformation, gathered online, will be used. When asked, peoplefrequently express concerns about their privacy, but their behavioroften does not reflect their concerns. We conducted an online survey toexamine participants' online privacy concerns, focusing especially onthe online shopping context. We asked participants about severalscenarios related to the privacy of personal information. We found thatPrivacy Finder, a P3Penhanced search engine, provides information thataddresses the scenarios that participants believe are most likely tooccur. We also asked participants about a wide range of items forpurchase online to evaluate which types of items are more likely toraise privacy concerns. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/29463 Title: What's in a (Missing) Name? Status and Signaling in Open Standards Development<br/><br/>Waguespack, Dave - University of Maryland; Simcoe, Tim - University of Toronto; Fleming, Lee - Harvard Business School<br/><br/>Abstract: How much are we influenced by an author's identity? If identity matters,is it because we have a 'taste for status' or because it offers a usefulshortcut &mdash; a signal that is correlated with the likely importanceof their ideas? This paper presents evidence from a natural experimentthat took place at the Internet Engineering Task Force (IETF) &mdash; acommunity of engineers and computer scientists who develop the protocolsused to run the Internet. The results suggest that IETF participants useauthors' identity as a signal or filter, paying more attention toproposals from highstatus authors, and this has a surprisingly largeimpact on publication outcomes. There is little evidence of a 'taste'for status. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/31400 Title: Virality, Network Effects and Advertising<br/><br/>Tucker, Catherine<br/><br/>Abstract: Many video ads are designed to go viral, so that their disseminationdepends on customers sharing the ads with their friends. This paperexplores whether there is a trade-o between achieving this virality andthe eectiveness of the ad at persuading a consumer to purchase or adopta favorable attitude towards a product. In other words, do ads, by beingthe kind of ads that achieve virality, sacrice elements that would bebetter at persuading people to actually buy products? The analysiscombines data on the real-life virality of 400 video ad campaigns, andcrowd-sourced measurement of advertising eectiveness among 24,000consumers. Eectiveness is measured by randomly exposing half of theseconsumers to a video ad and half to a placebo ad, and then surveyingtheir attitudes towards the product. We nd that ads that were more`viral,' that is, ads that had achieved more views on websites such asYoutube.com, were indeed less eective at persuading consumers topurchase or adopt a favorable attitude to a brand. Relativead-eectiveness dropped by roughly 10% for every million views. Takinginto account the advantages of increased reach, this means that therewas a decline in overall advertising eectiveness at 3-4 million views.Importantly, ads that generated both views and consumer engagement inthe form of comments did not suer from the same tradeo. Such ads werealso be less intentionally provocative or outrageous than ads and morelikely to be viral due to humor or attractive visual-design. Tue, 20 Dec 2011 16:52:54 GMT http://hdl.handle.net/2451/28497 Title: Video Games and Violent Crime<br/><br/>Ward, Michael - University of Texas at Arlington<br/><br/>Abstract: Psychology studies of the effects of playing video games have foundemotional responses and physical reactions associated with reinforcedviolent and anti-social attitudes. It is not clear, however, whetherthese markers are associated with increases in one's preferences foranti-social behaviors or whether virtual behaviors act to partially sateone's desire for actual antisocial behaviors. Violent or criminalbehaviors in the virtual world and in the physical world could plausiblybe either complements or substitutes. A finding of one versus the otherwould have diametrically opposing policy implications. I study theincidence of criminal activity as related to a proxy for increasedgaming, the number of game stores, from a panel of US counties from 1994to 2004. With fixed county and year effects, I can examine if changesrelative increases in gaming in an area are associated with relativeincreases or decreases in criminal activity. For six of eight categoriesof crime, more game stores are associated with significant declines incrime rates. Proxies for other leisure activities, sports and movieviewing, do not have a similar effect. For confirmation, I also findthat mortality rates, especially mortality rates stemming from injuries,also are negatively related to the number of game stores. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28511 Title: Vertical Separation vs. Independent Entry in the Spanish ElectricityNetwork: An Experimental Approach<br/><br/>Ciarreta, Aitor - Universitat de Pais Vasco; Fatas, Enrique - Universitat de Valencia; Georgantzis, Nikolaos - Universitat Jaume; Gutierrez Hita, Carlos - Universitas Miguel Hernadez<br/><br/>Abstract: We present experimental results from a series of sessions organizedusing the Power Market simulator; a software designed to realisticallyreplicate the Spanish Electricity Market. In the experiments reportedhere we compare the status quo to two alternative treatments whichrepresent alternative market structures. In one of them, labeled asvertical separation, we assume that power generating firms andelectricity distributors-end-suppliers belong to separate businessgroups. In the second, we study the effect of entry by independentend-suppliers. Both alternative scenarios dominate the status quo interms of market efficiency, whereas the latter of them dominates the former. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/31459 Title: Vertical Leverage and the Sacrifice Principle: Why the Supreme Court gotTrinko Wrong<br/><br/>Economides, Nicholas<br/><br/>Abstract: Trinko, a local telecommunications services customer of AT&amp;T, suedVerizon for anti-competitively raising the costs of AT&amp;T, Verizon'srival in the market for local telecommunications services. Pursuant tothe rules of the Telecommunications Act of 1996, AT&amp;T was leasingparts of the local telecommunications net- work (unbundled networkelements, &quot;UNEs&quot;) from Verizon at &quot;cost plus reasonableprofit&quot; prices. The Supreme Court held that Trinko's complaintfailed to state a claim under &sect; 2 of the Sherman Act, and dismissedthe complaint. I argue that the Court drew in- .correct inferences fromits AsPen Skiing decision. The Court also missed a key verticalleveraging issue in Trinko. The opening of competition mandated by theTelecommunications Act of 1996 challenged Verizon's traditional monopolyin the local telecommu- nications services market. By raising the costand/or decreasing the quality of the service of rivals in the retailingservices market, Verizon aimed to preserve that monopoly. As a result ofthese ef- forts, rivals suffered a disadvantage. Yet Verizon also causedretail- ing rivals to lease a lower number of unbundled network elementsand thus incurred a revenue sacrifice. Therefore the actions ofVer- izonin raising the costs of retailing telecommunications services ri- valsare an indication of. liability according to the. &quot;sacrificeprinciple&quot; proposed in the Government's brief in Trinko, accordingto which a defendant is liable if its conduct &quot;involves a sacrificeof short-term profits or goodwill that makes sense only insofar as ithelps the defendant maintain or obtain monopoly power,&quot; eventhoughthe sacrifice principle defines a stringent condition for a finding of liability. Thu, 09 Feb 2012 20:44:13 GMT http://hdl.handle.net/2451/29863 Title: Vertical Integration, Exclusivity and Game Sales Performance in the USVideo Game Industry<br/><br/>Gil, Ricard - University of California Santa Cruz; Warzynski, Frederic - Aarhus School of Business, Denmark<br/><br/>Abstract: This paper empirically investigates the relation between verticalintegration and video game performance in the US video game industry.For this purpose, we use a widely used data set from NPD on video gamemonthly sales from October 2000 to October 2007. We complement thesedata with handly collected information on video game developers for allgames in the sample and the timing of all mergers and acquisitionsduring that period. By doing this, we are able to separate verticallyintegrated games from those that are just exclusive to a platform.First, we show that vertically integrated games produce higher revenuesand sell more units at higher prices than independent games. Second, weexplore the causal effect of vertical integration and find that, for theaverage integrated game, most of the difference in performance comesfrom better release and marketing strategies that soften competition andnot from ex-ante differences in video game quality. We also find thatexclusivity is associated with lower demand. Our estimates suggest thatconsumers value vertical integration features in their games between 4and 34 dollars per game. Thu, 29 Oct 2009 22:58:59 GMT http://hdl.handle.net/2451/28519 Title: Vertical Integration and Exclusivity in Platform and Two-Sided Markets<br/><br/>Lee, Robin S. - Harvard Business School<br/><br/>Abstract: This paper develops techniques to analyze the adoption decisions of bothconsumers and firms for competing platform intermediaries in two-sidedmarkets, and applies the methodology to empirically measure the impactof vertical integration and exclusive contracting in thesixth-generation of the U.S. videogame industry (2000-2005). I firstintroduce a framework to structurally estimate consumer demand in thesetypes of hardware-software markets which (i) simultaneously analyzesboth hardware and software adoption decisions; (ii) accounts for dynamicissues including the selection of heterogenous consumers acrossplatforms, durability of goods, and agents' timing of purchases; and(iii) explicitly provides the marginal contribution of an individualsoftware title to each platform's installed base of users. Demandresults show the gains obtained by a platform provider from exclusiveaccess to certain software titles can be large, and failure to accountfor dynamics, consumer heterogeneity, and multiple hardware purchasessignificantly biases estimates. I next specify dynamic network formationgame to model the adoption decision of hardware platforms by softwareproviders. Counterfactual experiments indicate that vertical integrationand exclusivity benefited the smaller entrant platforms and not thedominant incumbent, which stands contrary to the interpretation ofexclusivity as primarily a means of foreclosure and entry deterrence. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28425 Title: Versioning and Quality Distortion in Software? Evidence fromE-CommercePanel Data<br/><br/>Ghose, Anindya - NYU Stern School of Business; Sundararajan, Arun - NYU Stern School of Business<br/><br/>Abstract: We present a framework for measuring software quality using pricing anddemand data, and empirical estimates that quantify the extent of qualitydegradation associated with software ver- sioning. Using a 7-month,108-product panel of software sales from Amazon.com, we document theextent to which quality varies across different software versions,estimating quality degradation that ranges from as little as 8% to asmuch as 56% below that of the corresponding flagship ver- sion.Consistent with prescriptions from the theory of verticaldi&curren;erentiation, we also find that an increase in the total numberof versions is associated with an increase in the difference in qualitybetween the highest and lowest quality versions, and a decrease in thequality difference between 'neighboring' versions. We compare ourestimates with those derived from two sets of subjective measures ofquality, based on CNET editorial ratings and Amazon.com user reviews,and discuss competing interpretations of the significant differencesthat emerge from this comparison. As the first empirical study ofsoftware versioning that is based on both subjective and econometricallyestimated measures of quality, this paper provides a framework fortesting a wide variety of results in IS that are based on related modelsof vertical differentiation, and its findings have importantimplications for studies that treat web-based user ratings as cardinal data. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28463 Title: Using Uncensored Communication Channels to Divert Spam Traffic<br/><br/>Chiao, Benjamin - University of Michigan; MacKie-Mason, Jeffrey - University of Michigan<br/><br/>Abstract: We offer a microeconomic model of the two-sided market for the dominantform of spam: bulk, unsolicited, and commercial advertising email. Weadopt an incentive-centered design approach to develop a simple,feasible improvement to the current email system using an uncensoredcommunication channel. Such a channel could be an email folder oraccount, to which properly tagged commercial solicitations are routed.We characterize the circumstances under which spammers would voluntarilymove much of their spam into the open channel, leaving the traditionalemail channel dominated by person-to-person, non-spam mail. Our methodfollows from observing that there is a real demand for unsolicitedcommercial email, so that everyone can be made better off if a channelis provided for spammers to meet spamdemanders. As a bonus, the absenceof filtering in an open channel restores to advertisers the incentive tomake messages truthful, rather than to disguise them to avoid filters.We show that under certain conditions all email recipients are betteroff when an open channel is introduced. Only recipients wanting spamwill use the open channel enjoying the less disguised messages, and forall recipients the satisfaction associated with desirable mail receivedincreases, and dissatisfaction associated with both undesirable mailreceived and desirable mail filtered out decreases. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/28430 Title: Used Good Trade Patterns: A Cross-Country Comparison of ElectronicSecondary Markets<br/><br/>Ghose, Anindya - NYU Stern School of Business<br/><br/>Abstract: A series of recent papers have investigated the nature of trading andsorting induced by the dynamic price mechanism in a competitive durablegood market with adverse selection and exogenous entry of traders overtime. These models are dynamic versions of Akerlof's (1970) seminalwork. The general set up consist of identical cohorts of durable goods,whose quality is known only to potential sellers, enter the market overtime and a common result is that there exists a cyclical equilibriumwhere all goods are traded within a finite number of periods afterentry. Market failure is reflected in the relationship between productquality (and product reliability) and the length of waiting time beforetrade as well as on the relationship between average price decline andextent of trade of used goods. Based on a unique 9-month datasetcollected from Amazon's secondary market across multiple countries, andmultiple product categories we provide empirical evidence of tradepatterns and the presence of adverse selection. We show how used goodquality and product reliability affect resale turnaround times in anelectronic secondary market. We find some empirical evidence that isconsistent with theoretical predictions existing in the literature. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28464 Title: Usage and Diffusion of Cellular Telephony, 1998-2004<br/><br/>Grajek, Michał - Wissenschaftszentrum Berlin (WZB) and Humboldt University; Kretschmer, Tobias - University of Munich and LSE<br/><br/>Abstract: In this paper, we study the dynamics of usage intensity ofsecond-generation cellular telephony over the diffusion curve. Weaddress two specific questions: First, does information about usageintensity over time allow us to draw conclusions about the underlyingdrivers of technology diffusion? Second, what effect does the existenceand penetration of previous generations and other networks in the samegeneration on network usage intensity? Using an operator-level panelcovering 41 countries with quarterly data over 6 years, we find thatheterogeneity among adopters dominates network effects and thatdifferent technological generations are complements in terms of usage,but substitutes in terms of subscription. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/28447 Title: Tying in Two-Sided Markets with Multi-Homing<br/><br/>Choi, Jay Pil - Michigan State University<br/><br/>Abstract: This paper analyzes the effects of tying arrangements on marketcompetition and social welfare in two-sided markets when economic agentscan engage in multi-homing, that is, they can participate in multipleplatforms in order to reap maximal network benefits. The model showsthat tying induces more consumers to multi-home and makesplatform-specific exclusive content available to more consumers, whichis also beneficial to content providers. As a result, tying can bewelfare-enhancing if multi-homing is allowed, even in cases where itswelfare impacts are negative in the absence of multi-homing. Theanalysis thus can have important implications for recent antitrust casesin industries where multi-homing is prevalent. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/28443 Title: Two-Sided Competition of Proprietary vs. Open Source TechnologyPlatformsand the Implications for the Software Industry<br/><br/>Economides, Nicholas - NYU Stern School of Business; Katsamakas, Evangelos - Fordham University<br/><br/>Abstract: Technology platforms, such as Microsoft Windows, are the hubs oftechnology industries. We develop a framework to characterize theoptimal two-sided pricing strategy of a platform firm; that is, thepricing strategy toward the direct users of the platform as well astoward firms offering applications that are complementary to theplatform. We compare industry structures based on a proprietary platform(such as Windows) with those based on an open source platform (such asLinux), and analyze the structure of competition and industryimplications in terms of pricing, sales, profitability, and socialwelfare. We find that, when the platform is proprietary, the equilibriumprices for the platform, the applications, and the platform access feefor applications may be below marginal cost, and we characterize demandconditions that lead to this. The proprietary appiications sector of anindustry based on an open source platform may be more profitable thanthe total profits of a proprietary platform industry. When users have astrong preference for application variety, the total profits of theproprietary industry are larger than the total profits of an industrybased on an open source platform. The variety of applications is largerwhen the platform is open source. When a system based on an open sourceplatform with an independent proprietary application competes with aproprietary system, the proprietary system is likely to dominate theopen source platform industry both in terms of market share andprofitability. This may explain the dominance of Microsoft in the marketfor PC operating systems. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28416 Title: Two-Sided Competition of Proprietary vs. Open Source TechnologyPlatformsand the Implications for the Software Industry<br/><br/>Economides, Nicholas - NYU Stern School of Business; Katsamakas, Evangelos - Fordham University<br/><br/>Abstract: Technology platforms, such as Microsoft Windows, are the hubs oftechnology industries. We develop a framework to characterize theoptimal two-sided pricing strategy of a platform firm; that is, thepricing strategy toward the direct users of the platform as well astoward firms offering applications that are complementary to theplatform. We compare industry structures based on a proprietary platform(such as Windows) with those based on an open source platform (such asLinux), and analyze the structure of competition and industryimplications in terms of pricing, sales, profitability, and socialwelfare. We find that, when the platform is proprietary, the equilibriumprices for the platform, the applications, and the platform access feefor applications may be below marginal cost, and we characterize demandconditions that lead to this. The proprietary applications sector of anindustry based on an open source platform may be more profitable thanthe total profits of a proprietary platform industry. When users have astrong preference for application variety, the total profits of theproprietary industry are larger than the total profits of an industrybased on an open source platform. The variety of applications is largerwhen the platform is open source. When a system based on an open sourceplatform with an independent proprietary application competes with aproprietary system, the proprietary system is likely to dominate theopen source platform industry both in terms of market share andprofitability. This may explain the dominance of Microsoft in the marketfor PC operating systems. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/31458 Title: Two-Sided Competition of Proprietary vs. Open Source TechnologyPlatforms and the Implications for the Software Industry<br/><br/>Economides, Nicholas; Katsamakas, Evangelos Thu, 09 Feb 2012 20:31:01 GMT http://hdl.handle.net/2451/31380 Title: Trichet Bonds To Resolve the European Sovereign Debt Problem<br/><br/>Nicholas, Economides; Roy, Smith<br/><br/>Abstract: We propose the creation of &ldquo;Trichet Bonds&rdquo; as acomprehensive solution to the current sovereign debt crisis in the EUarea. &ldquo;Trichet Bonds,&rdquo; to be named after the ECB presidentJean-Claude Trichet, will be similar to &ldquo;Brady Bonds&rdquo; thatresolved the Latin American debt crisis in the late 1980s and were namedafter the then Treasury Secretary Nicholas Brady. Like the Brady Bonds,Trichet Bonds will be new long-duration bonds issued by countries in theEU area that will be collateralized by zero-coupon bonds of the sameduration issued by the ECB. The zero-coupon bonds will be sold by theECB to the countries issuing Trichet Bonds, which will be offered inexchange for outstanding sovereign debt of the countries. The exchangeis offered at market value, so current debt holders will experience a&ldquo;haircut&rdquo; from par value, and thus the exchange does notinvolve a &ldquo;bailout.&rdquo; However, present holders of sovereigndebt will be exchanging low quality bonds with limited liquidity, forhigher quality bonds with greater liquidity. Debt holders not acceptingthe exchange will be at risk of a forced restructuring at a later dateat terms less favorable. The effect of the exchange offer, if athreshold of approximately 70% approve it, is to replace old debt with alesser amount of new debt with longer maturities. Thu, 15 Dec 2011 16:06:22 GMT http://hdl.handle.net/2451/31397 Title: To Surcharge or Not To Surcharge? A Two-Sided Market Perspective of theNo-Surcharge Rule<br/><br/>Economides, Nicholas; Henriques, David<br/><br/>Abstract: In Electronic Payment Networks (EPNs) the No-Surcharge Rule (NSR)requires that merchants charge the same nal good price regardless ofthe means of payment chosen by the customer. In this paper, we analyze athree-party model (consumers, merchants, and proprietary EPNs) to assessthe impact of a NSR on the electronic payments system, in particular, oncompetition among EPNs, network pricing to merchants and consumers, EPNspro ts, and social welfare. We show that imposing a NSR has a number ofe&curren;ects. First, it softens competition among EPNs and rebalancesthe fee structure in favor of cardholders and to the detriment ofmerchants. Second, we show that the NSR is a pro table strategy for EPNsif and only if the network e&curren;ect from merchants to cardholders issu&cent; ciently weak. Third, the NSR is socially (un)desirable if thenetwork externalities from merchants to cardholders are su&cent; cientlyweak (strong) and the merchants market power in the goods market issu&cent; ciently high (low). Our policy advice is that regulators shoulddecide on whether the NSR is appropriate on a market-by-market basisinstead of imposing a uniform regulation for all markets. Tue, 20 Dec 2011 16:41:22 GMT http://hdl.handle.net/2451/31403 Title: The Welfare Effects of Mobile Termination Rate Regulation inAsymmetricOligopolies: the Case of Spain<br/><br/>Hurkens, Sjaak; Lopez, Angel<br/><br/>Abstract: We examine the e&curren;ects of mobile termination rate regulation inasymmetric oligopolies. We do this by extending existing models ofasymmetric duopoly and symmetric oligopoly where consumer expectationsabout market shares are passive. We rst calibrate productdi&curren;erentiation parameters using detailed data from the Spanishmarket from 2010. Next, we predict equilibrium outcomes and welfaree&curren;ects under alternative scenarios of future termination rates.Lowering termination rates typically lowers pro ts of all networks andimproves consumer and total surplus. Tue, 20 Dec 2011 21:07:19 GMT http://hdl.handle.net/2451/28411 Title: The Welfare Consequences of ATM Surcharges: Evidence from aStructuralEntry Model<br/><br/>Gowrisankaran, Gautam - Washington University in St. Louis and NBER; Krainer, John - Federal Reserve Bank of San Francisco<br/><br/>Abstract: We estimate a structural model of the market for automatic tellermachines (ATMs) in order to evaluate the implications of regulating ATMsurcharges on ATM entry and consumer and producer surplus. We estimatethe model using data on firm and consumer locations, and identify theparameters of the model by exploiting a source of localquasi-experimental variation, that the state of Iowa banned ATMsurcharges during our sample period while the state of Minnesota didnot. We develop new econometric methods that allow us to estimate theparameters of equilibrium models without computing equilibria. MonteCarlo evidence shows that the estimator performs well. We find that aban on ATM surcharges reduces ATM entry by about 12 percent, increasesconsumer welfare by about 10 percent and lowers producer profits byabout 10 percent. Total welfare remains about the same under regimesthat permit or prohibit ATM surcharges and is about 17 percent lowerthan the surplus maximizing level. This paper can help shed light on thetheoretically ambiguous implications of free entry on consumer andproducer welfare for differentiated products industries in general andATMs in particular. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/28434 Title: The Incentive To Participate In Open Source Projects: A Signaling Approach<br/><br/>Spiegel, Yossi - Tel Aviv University<br/><br/>Abstract: This paper examines the incentives of programmers to contribute to opensource software projects on a voluntary basis. In particular, the paperlooks at this incentive changes as (i) performance becomes more visibleto the relevant audience, (ii) effort has a stronger impact onperformance, and (iii) performance becomes more informative abouttalent. In all three cases, it is shown that whether we start from astable interior equilibrium or an unstable interior equilibrium. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28418 Title: The Incentive for Vertical Integration<br/><br/>Economides, Nicholas - NYU Stern School of Business<br/><br/>Abstract: This paper evaluates the incentive of firms to vertically integrate in asimple 2X2 Bertrand model of two substitutes that are each comprised oftwo complementary components. It confirms that all prices fall as aresult of a vertical merger. Further, we find that, when the compositegoods are poor substitutes, producers of complementary components arebetter off after integration. Thus, at equilibrium, each pair ofcomplementary goods is produced by a single firm (parallel verticalintegration). In contrast, when the composite goods are closesubstitutes, vertical integration reduces profits of the merging firmsand is therefore undesirable. Thus, at equilibrium, all four productsare produced by independent firms (independent ownership). The reasonfor the change in the direction of the incentive to merge is that, asthe composite goods become closer substitutes, competition between themreduces prices (in comparison to full monopoly) thereby eliminating theusefulness of a vertical merger in accomplishing the same price effect.We also find that, for intermediate levels of substitution, firmsproducing complementary components prefer to merge only if thesubstitute good is produced by an integrated firm. Thus, forintermediate levels of substitution, both parallel vertical integrationand independent ownership are equilibria. When the demand system issymmetric, total surplus is higher in parallel vertical integration, forall degrees of substitution among the products, even for the case whenthe goods are close substitutes and parallel vertical integration is notthe equilibrium outcome. Thus, the market provides less verticalintegration than is optimal from a social surplus maximizing point of view. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28514 Title: The Impacts of Shopbots on Online Consumer Search<br/><br/>Zhang, Jennifer - University of Texas at Arlington; Jing, Bing - Cheung Kong Graduate School of Business<br/><br/>Abstract: Online price comparison agents (shopbots) allow consumers toinstantaneously receive price and other information from many onlineretailers. Online consumer clickstream data from ComScore Inc.demonstrate that consumers are increasingly using shopbots to conductsearch. This phenomenon raises such questions as &quot;how do shopbotschange consumers' search behavior?&quot; and &quot;do they reduceconsumers' online search?&quot; Conventional wisdom suggests thatconsumers are expected to search less because shopbots have displayedprices and other relative information from retailers on the searchresult page(s). Surprisingly, this study demonstrates the oppositeresult. That is, consumers are actually visiting more online retailerweb sites after using shopbots. This finding suggests that aftersearching for an item through a shopbot and receiving the priceinformation, consumers will continue to look for detailed informationabout the online retailers by visiting their web sites. The empiricalfinding is explained by an analytical model, which shows that on the onehand shopbots reduce the marginal benefit of searching additional onlinestores; on the other hand they reduce the cost of search. Thereforewhether shopbots reduce consumer search depends on the cost of reducingper unit of risk, which is decided by a number of factors, such asmarginal search costs, price dispersion and quality differentiationamong stores, price and quality correlation, and consumers' relativepreference for service quality. The model also gives sufficient andnecessary conditions under which shopbots increase consumer surplus. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28453 Title: The Impact on Broadband Access to the Internet of the Dual OwnershipofTelephone and Cable Networks<br/><br/>Pereira, Pedro - Autoridade da Concorrencia; Ribeiro, Tiago - Indera<br/><br/>Abstract: In Portugal, the telecommunications incumbent offers broadband access tothe Inter- net, both through digital subscriber line and cable modem. Inthis article, we estimate the impact on broadband access to the Internetof the structural separation of these two businesses. We use a panel ofconsumer level data and a discrete choice model to estimate the priceelasticities of demand and the marginal costs of broadband access to theInternet. Based on these estimates, we simulate the effect on prices andsocial welfare of the structural separation. Our results indicate thatthe structural separation would lead to substantial price reductions.For broadband clients, on average, each household would save 3:37 eurosper month, or 14% of the current price levels. Overall, on average, eachhousehold would save 2:73 euros per month, or 14% of the current pricelevels. We test the robustness of our results in terms of: (i) theestimates of the demand elasticities, (ii) the strategic behavior of thefirms, and (iii) the market share estimates. There is no evidence of collusion. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/28517 Title: The Impact of Online Information on the Purchase of Certified Used Cars<br/><br/>Ramachandran, Vandana - Smith School of Business, University of Maryland; Viswanathan, Siva - Smith School of Business, University of Maryland; Gosain, Sanjay - Smith School of Business, University of Maryland<br/><br/>Abstract: Secondary markets have adopted a number of quality signaling mechanismssuch as certification to reduce information asymmetries between buyersand sellers in these markets. However the importance and value of thesesignals depends on the nature and extent of information asymmetries.With the growth of the Internet, consumers seeking to purchase usedgoods now have access to a plethora of information on various aspects oftheir purchase process. What then is the impact of such information onthe salience and value of a traditional quality signal such ascertification? We draw upon a unique and extensive dataset of consumerswho obtained vehicle and transaction related information from onlinesources in their used vehicle purchase process to examine the impact oftheir information-acquisition on the choice of certification, as well asthe price paid. We compare the outcomes of sales where consumerspurchased certified used cars with sales of used-cars where there was nocertification. Our findings highlight that product-related informationsubstitutes, and price-related information complements, certification asindicated by their differential impacts on demand and price of certifiedused cars. We discuss the relevance of our findings for buyers andsellers and outline implications for online information providers as well. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28452 Title: The Geography E-Commerce: Evidence from eBay and MercadoLibre<br/><br/>Hortacsu, Ali - University of Chicago and NBER; Martinez-Jerez, F. Asis - Harvard Business School; Douglas, Jason<br/><br/>Abstract: We analyze geographic patterns of trade using transactions data fromeBay and MercadoLibre, two large online auction sites. We find thatdistance continues to be an important deterrent to trade betweengeographically separated buyers and sellers, though at a lesser extentthan has been observed in studies of non-Internet commerce. We also finda strong 'home bias' towards trading with counterparties located in thesame city. Further analyses suggest that cultural factors and thepossibility of direct contract enforcement in case of breach are themain reasons behind the same city bias. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/28422 Title: The First Deal Might Be The Last: Building Long Term Relationships InThe Venture Capital Community<br/><br/>Campo-Rembado, Miguel Angel - NYU Stern School of Business<br/><br/>Abstract: Previous analysis of venture capital activity in Silicon Valley hashighlighted the role of venture capital syndication as a mechanismthrough which venture capitalists (VCs) build trusting relationshipswithin the investment venture capital community. But what are thedynamic properties of the resulting network? This paper analyzes thedynamics of syndicated deals in technology sectors. The results suggestthat VCs build reputation by committing to provide future funds in astaged deal and honoring their commitment. Reputation increasescooperation, in terms of access to 'deal flow'. The commitment toprovide future funding, however, is expensive in terms of theopportunity costs associated with a reduction in the number of newstartups in which they can participate. The reputation system isenforced by established VCs, who have more exposure to the 'deal flow'. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28527 Title: The Elusive Antitrust Standard on Bundling in Europe and in the UnitedStates in the Aftermath of the Microsoft Cases<br/><br/>Economides, Nicholas - NYU Stern School of Business; Llanos, Ioannis - University College<br/><br/>Abstract: Allegations of anticompetitive tying and bundling were significant partsof the antitrust cases against Microsoft in the United States and theEuropean Union. The facts are well known. Starting with the integrationof MS-DOS to Windows and the introduction of Windows XP, Microsoft hasprogressively produced and added to the Windows operating system anumber of applications, such as its Web browser, Internet Explorer(which was included in Windows 95 in 1995), and Windows Media Player(WMP), which was integrated to Windows ME in 2000. Microsoft's policy ofintegrating new functionalities to the Windows operating system has beenchallenged by both the U.S. and the European antitrust authorities. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/29515 Title: The Effects of International Simple Resale on Prices in InternationalTelecommunications Markets<br/><br/>Pearcy, Jason - Tulane University; Savage, Scott J. - University of Colorado at Boulder<br/><br/>Abstract: This paper empirically investigates the effect of international simpleresale (ISR) authorization on the prices for international messagetelephone service (IMTS). We compile a firm-level panel data set forover 200 United States-foreign country bilateral markets from 1995 to2004. These data provide detailed information on prices, variable costs,fixed costs and market shares for 75 firms for each bilateral market, aswell as the timing of ISR authorization by the Federal CommunicationsCommission for each bilateral market. Estimates from adifference-in-differences model show that ISR authorization, and theassociated lowering of barriers to entry, almost always results in lowerprices for all markets. Additionally, we find evidence that ISRauthorization alters the relationship between market concentration andprice. Prior to ISR authorization more concentrated markets have higherprices. ISR authorization dampens this effect and in some cases reversesthe relationship so that market concentration is negatively correlatedwith IMTS prices set by incumbent firms. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/31408 Title: The Effects of Home Computers on Educational Outcomes: Evidence from aField Experiment with Schoolchildren<br/><br/>Fairlie, Robert; Robinson, Jonathan<br/><br/>Abstract: Are home computers are an important input in the educational productionfunction? To address this question, we conduct a field experimentinvolving the provision of free computers to schoolchildren for homeuse. Low-income children attending middle and high schools in 15 schoolsin California were randomly selected to receive free computers andfollowed over the school year. The results indicate that the experimentsubstantially increased computer ownership and total computer use amongthe schoolchildren with no substitution away from use at school or otherlocations outside the home. We find no evidence that the home computersimproved educational outcomes for the treatment group. From detailedadministrative data provided by the schools and a follow-up survey, wefind no evidence of positive effects on a comprehensive set of outcomessuch as grades, test scores, credits, attendance, school enrollment,computer skills, and college aspirations. The estimates also do notindicate that the effects of home computers on educational outcomes areinstead negative. Our estimates are precise enough to rule out evenmodestly-sized positive or negative impacts. The lack of a positive neteffect on educational outcomes may be due to displacement fromnon-educational uses such as for games, social networking, andentertainment. We find evidence that total hours of computer use forgames and social networking increases substantially with having a homecomputer, and increases more than total hours of computer use for schoolwork. Wed, 21 Dec 2011 16:56:50 GMT http://hdl.handle.net/2451/28491 Title: The Effects Of Competition On The Price For Cable Modem Internet Access<br/><br/>Chen, Yongmin - University of Colorado at Boulder; Savage, Scott J. - University of Colorado at Boulder<br/><br/>Abstract: An important issue in economics is how market structure affects prices.While the standard view is that competition lowers prices, Chen andRiordan (2006) argued that with product differentiation it is notexceptional for prices to be higher under duopoly than monopoly. Thispaper empirically investigates one implication from Chen and Riordan,namely, that prices are lower under duopoly when consumer preferencesfor the two products are similar, and they are more likely to be higherunder duopoly if consumer preferences for the two products are morediverse. Focusing on the price for cable modem Internet access, with orwithout competition from a DSL provider, and using education dispersionand ethnic diversity as proxies for consumer preference diversity, wefind empirical support for this implication. In markets where preferencediversity is low, competition reduces prices. As preference becomes morediverse, the negative effect of competition on prices diminishes; andwhen preference diversity is high enough, competition increases prices. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28437 Title: The Effect of P2P File Sharing on Music Markets: ASurvivalAnalysisofAlbums on Ranking Charts<br/><br/>Bhattacharjee, Sudip - University of Connecticut; Gopal, Ram D. - University of Connecticut; Lertwachara, Kaveepan - University of Connecticut; Marsden, James R. - University of Connecticut; Telang, Rahul - Carnegie Mellon University<br/><br/>Abstract: Recent technological and market forces have profoundly impacted themusic industry. Emphasizing threats from peer-to-peer (P2P)technologies, the industry continues to seek sanctions againstindividuals who offer significant number of songs for others to copy.Yet there is little rigorous empirical analysis of the impacts of onlinesharing on the success of music products. Combining data on theperformance of music albums on the Billboard charts with file sharingdata from a popular network, we: 1) assess the impact of recentdevelopments related to the music industry on survival of music albumson the charts, and 2) evaluate the specific impact of P2P sharing on analbum's survival on the charts. In the post P2P era, we findsignificantly reduced chart survival. The second phase of our studyisolates the impact of file sharing on album survival. We find thatsharing does not seem to hurt the survival of albums. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28391 Title: The Effect Of Entry And Market Structure On Cellular Pricing Tactics<br/><br/>Seim, Katja - Stanford University; Viard, V. Brian - Stanford University<br/><br/>Abstract: We test the effect of entry on the tariff choices of incumbent cellularfirms. We relate the change in the breadth of calling plans between1996, when incumbents enjoyed a duopoly market, and 1998, whenincumbents faced increased competition from personal communicationsservices (PCS) firms. Entry by PCS competitors differed acrossgeographic markets due to the number of licenses left undeveloped as aresult of the bankruptcy of some of the auctions&rsquo; winning biddersand due to variation across markets in the time required to build asufficiently large network of wireless infrastructure. We find thatincumbents increase tariff variety in markets with more entrants andthat this effect is not explained by demographic heterogeneity or costdifferences in maintaining calling plans across markets. We also findthat incumbents are more likely to upgrade their technology from the oldanalog technology to the new digital technology in markets with moreentry, suggesting that entry also has indirect effects on tariff choicevia firms' technology adoption decisions. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/31456 Title: The Effect of Entry and Market Structure on Cellular Pricing Tactics<br/><br/>Seim, Katja; Viard, Brian<br/><br/>Abstract: We test the effect of entry on the tariff choices of incumbent cellularfirms. We relate the change in the breadth of calling plans between1996, when incumbents enjoyed a duopoly market, and 1998, whenincumbents faced increased competition from personal communicationsservices (PCS) firms. Entry by PCS competitors differed acrossgeographic markets due to the number of licenses left undeveloped as aresult of the bankruptcy of some of the auctions&rsquo; winning biddersand due to variation across markets in the time required to build asufficiently large network of wireless infrastructure. We find thatincumbents increase tariff variety in markets with more entrants andthat this effect is not explained by demographic heterogeneity or costdifferences in maintaining calling plans across markets. We also findthat incumbents are more likely to upgrade their technology from the oldanalog technology to the new digital technology in markets with moreentry, suggesting that entry also has indirect effects on tariff choicevia firms&rsquo; technology adoption decisions. Thu, 09 Feb 2012 20:24:10 GMT http://hdl.handle.net/2451/31446 Title: The Effect of Electronic Commerce on Geographic Trade and Price Variancein a Business-to-Business Market<br/><br/>Forman, Chris; Overby, Eric<br/><br/>Abstract: Imbalances in supply and demand often cause the price for the same goodto vary across geographic locations. Economic theory suggests that ifthe price differential is greater than the cost of transporting the goodbetween locations, then buyers will shift demand from high-pricelocations to lowprice locations, while sellers will shift supply fromlow-price locations to high-price locations. This should make pricesmore uniform and cause the overall market to adhere more closely to the&ldquo;law of one price.&rdquo; However, this assumes that traders havethe information necessary to shift their supply/demand in an optimalway. We investigate this using data on over 2 million transactions inthe wholesale used vehicle market from 2003 to 2008. This market hastraditionally consisted of a set of non-integrated regional marketscentered on market facilities located throughout the United States.Supply / demand imbalances and frictions associated with trading acrossdistance created significant geographic price variance for generallyequivalent vehicles. During our sample period, the percentage oftransactions conducted electronically in this market rose fromapproximately 0% to approximately 20%. We argue that the electronicchannel reduces buyers&rsquo; information search costs and show thatbuyers are more sensitive to price and less sensitive to distance whenpurchasing via the electronic channel than via the traditional physicalchannel. This causes buyers to be more likely to shift demand away froma nearby facility where prices are high to a more remote facility whereprices are low. We show that these &ldquo;cross-facility&rdquo; demandshifts have led to a 25% reduction in geographic price variance duringthe time frame of our sample. We also show that sellers are reacting tothese market shifts by becoming less strategic about vehicledistribution, given that vehicles are increasingly likely to fetch asimilar price regardless of where they are sold. Tue, 17 Jan 2012 21:53:55 GMT http://hdl.handle.net/2451/28417 Title: The Economics of the Internet Backbone<br/><br/>Economides, Nicholas - NYU Stern School of Business<br/><br/>Abstract: This paper discusses the economics of the Internet backbone. I discusscompetition on the Internet backbone as well as relevant competitionpolicy issues. In particular, I show how public protocols, ease ofentry, very fast network expansion, connections by the same InternetService Provider (ISP) to multiple backbones (ISP multi-homing), andconnections by the same large web site to multiple ISPs (customermulti-homing)enhance price competition and make it very unlikely thatany firm providing Internet backbone connectivity would find itprofitable to degrade or sever interconnection with other backbones inan attempt to monopolize the Internet backbone. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/28479 Title: The Economics of the Internet<br/><br/>Economides, Nicholas - NYU Stern School of Business<br/><br/>Abstract: We discuss salient economic aspects of the Internet, including thepossible abolition of net neutrality by local broadband access networksas well as potential incompatibilities and degradation of connectivityin the Internet backbone. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28402 Title: The Doubtful Profitability of Foggy Pricing<br/><br/>Miravete, Eugenio J. - University of Pennsylvania<br/><br/>Abstract: This paper studies whether competition may induce firms abandoningdeceptive pricing strategies aimed to profit from mistaken choices ofconsumers. The empirical analysis focuses on the pricing practices ofearly U.S. cellular firms, both under monopoly and duopoly. Foggy tariffoptions are those that are dominated by another option or a combinationof other tariff options offered by the firm. I also define a measure offogginess of non-dominated tariffs based on the range of airtime usagefor which they are the least expensive option among those available.Results indicate that firms offer more dominated tariff options in acompetitive market than under monopoly. While markets are profitable,perhaps because they grow or because firms collude, the use of foggytactics is not frequent. However, if the market is more mature, or iffirms do not cooperate, thus reducing the return to their investment,then they commonly turn to foggy pricing. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/29460 Title: The Diffusion of Fixed Broadband: An Empirical Analysis<br/><br/>Lee, Sangwon - Jamestown College; Brown, Justin S. - University of Florida<br/><br/>Abstract: Broadband infrastructure is a key component of the knowledge economy.Broadband connections on both fixed and mobile networks are becoming anindicator of the knowledge economy. Employing the largest secondarydata set, this study examines adoption factors of fixed broadband. Theresult of nonlinear and linear regression analysis of fixed broadbanddeployment suggests local loop unbundling (LLU) policy, platformcompletion between different broadband technologies and other diverseindustry, ICT (Information and Communication Technology) and demographicfactors influence fixed broadband diffusion. Specifically, theregression analysis of fixed broadband penetration found differenttypes of LLU policies and previous fixed broadband penetration aresignificant factors of fixed broadband deployment. Some of thesignificant factors of fixed broadband deployment are different indeveloped countries than developing countries. This findingsuggests, countries fostering broadband deployment need to adopt LLUpolicy for broadband, but the costs and benefits of the different LLUpolicy types should be carefully considered. Interestingly, the resultof nonlinear regressions of fixed-broadband penetration suggest highlevels of platform competition are related to high levels offixedbroadband penetration, but the effects of platform competition arenot statistically significant in OECD countries. This outcome isconsistent with the result of linear regression analysis of developedcountries (high income ITU membership countries). Considering OECDcountries are composed of 30 developed countries with comparativelyhigh GDP per capita, this result is robust. Taking into account thisstudy's results as well as previous empirical studies on fixed broadbanddeployment, the effects of platform competition are strong in theinitial deployment of fixed-broadband, but the effects of platformcompetition are decreasing when the broadband market size issufficiently large or the broadband market is mature. Also, asexpected, previous fixed- broadband penetration was found to be aninfluential factor of current fixed-broadband deployment in all ITUmembership countries, whether characterized as developed or developingcountries. Considering impacts of platform competition in ITUmembership countries, currently it appears in many countries thatnetwork effects and the effects of platform competition co-exist. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/29472 Title: The Demand for Products Linked to Public Goods: Evidence from an OnlineField Experiment<br/><br/>McManus, Brian - University of North Carolina; Bennet, Richard - CCA Global Partners<br/><br/>Abstract: We conduct a field experiment at a nonprofit organization's online storeto study how demand changes when consumers' purchases generate revenuefor a charitable cause. Consumers respond strongly when their purchasesgenerate small donations by an anonymous outside group, but responsesare substantially weaker when the outside donations are relativelylarge. Responses are also strong when the outside donation requires apersonal donation which consumers generally decline. Overall,increasing the salience of financial incentives appears to dampenconsumers' responses to charitable messages. We also present evidencethat the donation pledges reduce price sensitivity and have positivelong-term effects on demand. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/28387 Title: The Delft UMTS Testbed and End-user Security Features<br/><br/>Maitland, Carleen - Pennsylvania State University<br/><br/>Abstract: The advent of the UMTS mobile network technology and recent advances inwireless LANs create new possibilities for network and Internet access.This in turn may provide the basis for a range of new services, whichitself will change the roles of existing mobile firms and new entrants.A significant challenge for the industry will be safeguarding user dataand protecting network and end-user equipment from malicious attacks.These problems are currently the concern of desktop computer users andnetwork administrators, who are struggling to keep ahead of the latestsecurity threats. With the distributed nature of mobile devices it islikely that the management of network and end-user security will onlybecome more complicated. To better understand this challenge thisresearch has investigated the security features of a UMTS networktestbed as well as the possibilities of integration with WLANs at DelftUniversity of Technology in the Netherlands. In particular this researchaddresses the following questions from a user perspective: 1. Whatsecurity features are theoretically available in UMTS handsets and arelikely to be offered by UMTS network operators? 2. What factors arelikely to influence end user acceptance of these features? 3. What roledoes security play in UMTS/ WLAN integration? In addition to addressingthese questions this research also provided an opportunity to observecertain aspects of the relationship between the network operator andequipment manufacturer and handset providers, as well as the role ofstandards in the diffusion of a new technology. In what follows we firstdescribe the Delft UMTS testbed. This description provides the contextof the research as well as its limitations in terms of generalizabilityof results. This is followed by our findings, which are divided intosecurity, industry relations and standards, and handset issues. Section4 presents our conclusions and the report concludes with a series ofappendices, which contain detailed information about UMTS standards andsecurity features, WLAN technologies and WLAN &amp; cellular network integration. Tue, 31 Dec 2002 22:58:59 GMT http://hdl.handle.net/2451/29518 Title: Testing Models of Consumer Search using Data on Web BrowsingandPurchasing Behavior<br/><br/>De los Santos, Babur - Indiana University; Hortacsu, Ali- University of Chicago and NBER; Wildenbeest, Matthijs R. - Indiana University<br/><br/>Abstract: Using a large data set on web browsing and purchasing behavior we testto what extent consumers are searching in accordance to variousclassical search models. We find that the benchmark model of sequentialsearch with a known distributions of prices can be rejected based on therecall patterns we observe in the data. Moreover, we show that even ifconsumers are initially unaware of the price distribution and have tolearn the price distribution, observed search behavior for givenconsumers over time is more consistent with non-sequential search thansequential search with learning. Our findings suggest non-sequentialsearch provides a more accurate description of observed consumer searchbehavior. We then utilize the nonsequential search model to estimate theprice elasticities and markups of online book retailers. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28415 Title: Telecommunications Regulation: An Introduction<br/><br/>Economides, Nicholas - NYU Stern School of Business<br/><br/>Abstract: This paper examines the justifications, history, and practice ofregulation in the US telecommunications sector. We examine the impact oftechnological and regulatory change on market structure and businessstrategy. Among others, we discuss the emergence and decline of thetelecom bubble, the impact on pricing of digitization and the emergenceof Internet telephony (VOIP). We also examine the impact of the 1996Telecommunications Act on market structure and strategy in conjunctionwith the history of regulation and antitrust intervention in thetelecommunications sector. After discussing the impact of wirelesstechnologies, we conclude by venturing into some short term predictions.We express concern about the derailment of the implementation of the1996 Act by the aggressive legal tactics of the entrenched monopolists(the local exchange carriers), and we point to the real danger that theintent of Congress in passing the 1996 Act to promote competition intelecommunications will never be realized in local telecommunications inthe fashion that the 1996 prescribed. The decision of AT&amp;T to stopmarketing both long distance and local services to residential customersis a direct result of the derailing of the 1996 Act that has allowed thelocal service monopolists (i) to enter long distance while the localmarket was still monopolized; and (ii) to leverage their monopoly powerin the local market to the long distance market. We also discuss thewave of mergers in the Telecommunications and cable industries, thetelecom meltdown of 2000-2003, and issues that arose from the triennialreview by the FCC of implementation of the 1996 Act. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/29871 Title: Technology Shocks in Multi-Sided Markets: The Impact of Craigslist onLocal Newspapers<br/><br/>Seamans, Robert - NYU Stern School of Business; Zhu, Feng - University of Southern California<br/><br/>Abstract: Theories of multi-sided markets suggest that a platform's pricingstrategies on different sides of the market are closely linked, and inparticular, an increase in competition on one side may lead to anincrease in price on other sides. We empirically examine platforms'pricing strategies by exploiting the gradual expansion of Craigslist, awebsite providing classified ads services, into local newspaper markets.We adopt a differences-in-differences approach by comparing the pricingstrategies of local newspapers for which classified ads are likely to bea significant portion of their revenue to others before and afterCraigslist's entry. We find that these newspapers drop their classifiedad rates significantly more after Craigslist's entry. We also find thatthe impact of the entry of Craigslist propagates to other sides of thenewspaper market. These newspapers increase their subscription ratesrelative to others, and consequently, their circulation also drops more.Finally, lower circulation also leads to lower display ad rates forthese newspapers. Our study helps build an understanding of howincumbent media platforms respond to technologically disruptive entrantsin multi-sided markets. Thu, 29 Oct 2009 22:58:59 GMT http://hdl.handle.net/2451/28400 Title: Technical Compatibility and the Mode of Foreign Entry under Network Externalities<br/><br/>Klimenko, Mikhail - Georgia Institute of Technology; Saggi, Kamal - Southern Methodist University<br/><br/>Abstract: This paper examines the preferences of a foreign firm and awelfare-maximizing host country government over two modes of foreigndirect investment (FDI): de novo entry by the foreign firm andacquisition of the domestic incumbent. Two crucial features of the modelare the presence of network externalities and (endogenously determined)partial incompatibility between the technology of the domestic incumbentand that introduced by the foreign firm. The relative impact of themodes of entry on local welfare is determined by the degree ofcompetition (more intense under de novo entry) and the magnitude of thepositive network externality (greater under acquisition). The clashbetween the foreign firm's equilibrium choice and the local government'sranking of the two modes of entry might be a potential motivation forpolicy restrictions that limit the degree of foreign ownership. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/29505 Title: System Size, Lock-in and Network Effects for Patient Records<br/><br/>Miller, Amalia R. - University of Virginia; Tucker, Catherine E. - MIT Sloan School of Business<br/><br/>Abstract: We examine empirically whether the size of a firm using a networkaffects the scope of its network usage, and consequently network effectsand lock-in within the network. We use the example of hospitalinformation exchange. We find that hospitals in larger hospital systemsare more likely to exchange electronic patient information only withintheir system and less likely to exchange patient information externally.We show that hospitals are also more likely to exchange informationexternally if others hospitals also do so. This implies that thedisinclination of large hospital systems to exchange data externallyharms overall levels of network use. Our results highlight that makersof technology policy designed to encourage the optimal use of networksshould consider regulating the behavior of network users as well astechnology vendors. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/29501 Title: Switching Costs in Network Industries<br/><br/>Chen, Jiawei - University of California, Irvine<br/><br/>Abstract: In network industries, switching costs have two opposite effects on thetendency towards market tipping. First, the fat-cat effect makes thelarger firm price less aggressively and lose consumers to the smallerfirm. This effect tends to prevent tipping. Second, thenetwork-solidifying effect reinforces network effects by making anetwork size advantage longer-lasting and hence more valuable, thusintensifying price competition when networks are of comparable size.This effect tends to cause tipping. I find that when switching costs arehigh, the fat-cat effect dominates and an increase in switching costscan change the market from a tipping equilibrium to a sharingequilibrium. When switching costs are low, the network-solidifyingeffect dominates and an increase in switching costs can change themarket from a sharing equilibrium to a tipping equilibrium. Policyintervention to remove switching costs in network industries maysubstantially reduce the likelihood of market tipping. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28490 Title: Subscription Choices and Switching Costs in Mobile Telephony<br/><br/>Grzybowski, Lukasz - Competition Commission, UK; Pereira, Pedro - Autoridade da Concorrencia, Portugal<br/><br/>Abstract: In this article, we estimate the price elasticities of demand forsubscription and consumer switching costs for mobile telephony. We use apanel of Portuguese consumer level data to estimate a series ofmultinomial and mixed logit models. The demand for subscription iselastic. Switching costs are large. We use the structural model toperform several policy exercises. Switching costs and brand preferencesare shown to be important elements of the market structure of mobiletelephony. Price mediated network eects seem to be relatively less important. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28520 Title: Stuck in the Adoption Funnel: The Effect of Delays in the AdoptionProcess on Ultimate Adoption<br/><br/>Lambrecht, Anja - London Business School; Seim, Katja- Wharton School, University of Pennsylvania<br/><br/>Abstract: Online applications and services automate communications andtransactions between rms and consumers, promising large efficiencygains. However, consumers have been slow to use these onlinetechnologies intensively, despite widespread adoption of the internet.Customers frequently undergo a staggered adoption process that mayinvolve sign-up, experimentation, trial, and substantial usage untilthey fully embrace internet services. We ask whether delays in movingthrough the initial stages of this adoption process contribute toconsumers ultimately not using the service intensively. Such behaviorwould be consistent with laboratory findings on consumer memory. Weexplore this question using data from a German retail bank where only24% of the customers who sign up for the bank's online banking serviceuse it substantially. We use exogenous variation in delays in theadoption process, caused by vacations and public holidays in differentGerman states, to identify this effect. We find that delays in the earlystages of adoption significantly reduce a customer's probability ofmoving to substantial usage: A 10-day delay of a customer's first onlinelogin reduces the likelihood that she will ever use the technologysubstantially, by 33%. This eect is more severe for demographic groupswith less online experience. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/29498 Title: Strategies to Fight Ad-sponsored Rivals<br/><br/>Casadesus-Masanell, Ramon - Harvard Business School; Zhu, Feng - University of Southern California<br/><br/>Abstract: We analyze the optimal strategy of a high-quality incumbent that faces alow-quality ad-sponsored competitor. In addition to competing throughadjustments of tactical variables such as price or advertisingintensity, we allow the incumbent to consider changes in its businessmodel. We consider four alternative business models, two pure models(subscription-based and ad-sponsored) and two mixed models that arehybrids of the two pure models. We show that the optimal response to anad-sponsored rival often entails business model reconfigurations, aphenomenon that we dub 'competing through business models.' We also findthat when there is an ad-sponsored entrant, the incumbent is more likelyto prefer to compete through a pure, rather than a mixed, business modelbecause of cannibalization and endogenous vertical differentiationconcerns. We discuss how our study helps improve our understanding ofnotions of strategy, business model, and tactics in the field of strategy. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/29864 Title: Strategic Random Networks<br/><br/>Golub, Benjamin - Stanford University; Livne, Yair - Stanford University<br/><br/>Abstract: To study how economic fundamentals affect the formation of socialnetworks, a model is needed that (i) has agents responding rationally toincentives (ii) can be taken to the data. This paper combinesgame-theoretic and statistical approaches to network formation in orderto develop such a model. Agents spend costly resources to socialize.Their effort levels determine the probabilities of relationships, whichare valuable for their direct benefits and also because they lead toother relationships in a second stage of 'meeting friends of friends'.The model predicts random graphs with tunable degree distributions andclustering, and characterizes how those statistics depend on theeconomic fundamentals. When the value of friends of friends is low,equilibrium networks can be either sparse or thick. But as soon as thisvalue crosses a key threshold, the sparse equilibrium disappearscompletely and only densely connected networks are possible. Thistransition mitigates an extreme inefficiency. Thu, 29 Oct 2009 22:58:59 GMT http://hdl.handle.net/2451/28420 Title: Strategic Product Pre-announcements in Markets with Network Effects<br/><br/>Choi, Jay Pil - Michigan State University; Kristiansen, Eirik Gaard - Michigan State University; Nahm, Jae - HKUST, Hong Kong<br/><br/>Abstract: It is a widely adopted practice for firms to announce new products wellin advance of actual market availability. The incentives forpre-announcements are stronger in markets with network effects becausethey can be used to induce the delay of consumers' purchases andforestall the build-up of rival products' installed bases. However, suchannouncements often are not fulfilled, raising antitrust concerns. Weanalyze the effects of product pre-announcements in the presence ofnetwork effects when firms are allowed to strategically make falseannouncements. We also discuss their implications for consumer welfareand anti-trust policy. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28451 Title: Strategic Incompatibility in ATM Markets<br/><br/>Knittel, Christopher R. - University of California, Davis; Stango, Victor - Tuck School, Dartmouth<br/><br/>Abstract: We test whether firms use incompatibility strategically, using data fromATM markets. High ATM fees degrade the value of competitors' depositaccounts, and can in principle serve as a mechanism for siphoningdepositors away from competitors or for creating deposit accountdifferentiation. Our empirical framework can empirically distinguishsurcharging motivated by this strategic concern from surcharging thatsimply maximizes ATM profit considered as a standalone operation. Theresults are consistent with such behavior by large banks, but not bysmall banks. For large banks, the effect of incompatibility seems tooperate through higher deposit account fees rather than increaseddeposit account base. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/28496 Title: Standards Competition In The Presence Of Digital ConversionTechnology:An Empirical Analysis Of The Flash Memory Card Market<br/><br/>Liu, Charles Z. - University of Pittsburgh; Kemerer, Chris - University of Pittsburgh; Smith, Michael D. - Carnegie-Mellon University<br/><br/>Abstract: Both theoretical and empirical evidence suggest that in markets withstandards competition, strong network effects can make the strong growstronger and, in some circumstances, even 'tip' the market towards asingle, winner-take-all standard. We theorize that in the presence oflow cost conversion technologies and digital content, the tendencytowards market dominance can be lessened to the point where multipleincompatible standards are viable. Our hypotheses are empiricallyexamined in the context of the flash memory card market where bothnetwork effects and high quality conversion are present. The resultsshow that the availability of digital converters reduces the pricepremium of the leading flash card formats more than of the minorityformats. Therefore, producers of the non-dominant standards can bebetter off with the provision of conversion technology as thistechnology neutralizes the impact of network effects that would haveotherwise been more potent. We discuss both the social and privateimplications of our findings. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28432 Title: Stable and Efficient Electronic Business Networks: Key Players and theDilemma of Peripheral Firms<br/><br/>Suelzle, Kai - University of Munich &amp; Dresden University of Technology<br/><br/>Abstract: This paper studies a spatial model of electronic business networkformation where firms build links based on a cost-benefit analysis.Benefits result from directly and indirectly connected firms in terms ofknowledge flows, which are heterogeneous: a 'key-player' (e.g. a firmproviding an exchange platform in a business- to-business network)provides a higher level of knowledge flows than 'peripheral' firms (e.g.tier 3 suppliers in a vertically differentiated industry). Forintermediate cost values of link formation, stable and efficient networkstructures comprise only a subset of the total set of firms, excludingperipheral firms which are most distantly located to the key player.When link formation implies a certain degree of network congestion, thestable and efficient network size is smaller than in a model withbilateral decisions upon link formation between two firms. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/31398 Title: Spread Too Thin: Uncertainty Shocks and Diseconomies of Scope<br/><br/>Natividad, Gabriel; Sorenson, Olav<br/><br/>Abstract: Although many streams of literature have recognized that firms withbroader scope often underperform those with greater focus, relativelylittle research has examined the mechanisms that might account for thesediseconomies of scope. One potential mechanism is that uncertaintyshocks |events or short-term periods that upset the normal course ofbusiness| place unusual demands on the limited attention of managers.When managers of larger, more diverse rms allocate their time andorganizational resources to address these events, they necessarilydivert attention and resources away from other businesses, therebyconverting these uncertainty shocks in one part of the organization toperformance shocks in other parts of it. An empirical examination of therelationship between the distribution of lms in theaters and videos forsale demonstrates that uncertainty shocks in theatrical distributionbecome performance shocks in the video market and that the magnitude ofthese eects increases for larger, more diversied rms. Tue, 20 Dec 2011 16:45:35 GMT http://hdl.handle.net/2451/29511 Title: Software Innovation and the Open Source threat<br/><br/>Lambardi, German Daniel - GREMAQ, Toulouse School of Economics<br/><br/>Abstract: In this paper I study how innovation investment in a software duopoly isaffected by the fact that one of the firms is, or might become OpenSource. Firms can either be proprietary source (PS) or open source (OS)and have different initial technological levels. An OS firm is a forprofit organization whose basic software is OS and it is distributed forfree. The OS firm, however, is able to make profits from sellingcomplementary software and, on the cost side, it receives developmenthelp from a community of users. I first compare a duopoly composed bytwo PS firms with a mixed duopoly of a PS and OS firm and I find that aPS duopoly might generate more innovation than a mixed duopoly if theinitial technological gap between firms is small. However if this gap islarge, a PS duopoly generates less innovation than a mixed duopoly. Ithen extend the setting to allow PS firms to switch to OS or to remainPS. A PS firm wants to become OS if it gets behind enough in thetechnological race against a competitor. I find that the outside optionto become OS might soften competition on innovation since thetechnological leader prefers to reduce his innovation investment toavoid the OS switch of the follower. Therefore, although the switch toOS could generate higher investment levels ex-post it might generatelower investment ex-ante. In this context I nd that a governmentsubsidy to OS firms could be potentially harmful for innovation. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28523 Title: Software Exclusivity and the Scope of Indirect Network Effects in theU.S. Home Video Game Market<br/><br/>Corts, Kenneth S. - Rotman School of Management, University of Toronto; Lederman, Mara - Rotman School of Management, University of Toronto<br/><br/>Abstract: This paper investigates the scope of indirect network effects in thehome video game industry. We argue that the increasing prevalence ofnon-exclusive software gives rise to indirect network effects that existbetween users of competing and incompatible hardware platforms. This isbecause software non-exclusivity, like hardware compatibility, allows asoftware firm to sell to a market broader than a single platform'sinstalled base, leading to a dependence of any particular platform'ssoftware on all firms' installed bases. We look for evidence of thesemarket-wide network effects by estimating a model of hardware demand andsoftware supply. Our software supply equation allows the supply of gamesfor a particular platform to depend not only on the installed base ofthat platform, but also on the installed base of competing platforms.Our results indicate the presence of both a platform-specific networkeffect and -in recent years- a cross-platform (or generation-wide)network effect. Our finding that the scope of indirect network effectsin this industry has widened suggests one reason that this market, whichis often cited as a canonical example of one with strong indirectnetwork effects, is no longer dominated by a single platform. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/29522 Title: Social Ties and User Generated Content: Evidence from an Online Social Network<br/><br/>Hofstetter, Reto - University of Bern; Shriver, Scott K. - Stanford GSB; Nair, Harikesh S. - Stanford GSB; Miller, Klaus - University of Bern<br/><br/>Abstract: We use variation in wind speeds at surfing locations in Switzerland asexogenous shifters of users' propensity to post content about theirsurfing activity onto an online social network. We exploit thisvariation to test whether users' social ties on the network have acausal effect on their content generation, and whether conent generationin turn has a similar causal effect on the users' abilty to form socialties. Economically significant causal effects of this kind can producepositive feedback that generate multiplier e&curren;ects tointerventions that subsidize tie formation. We argue these interventionscan therefore be the basis of a strategy by the rm to indirectlyfaciliate content generation on the site. The exogenous variationprovided by wind speeds enable us to measure this feedback empiricallyand to assess the return on investment from such policies. We use adetailed dataset from an online social network that comprises thecomplete details of social tie formation and content generation on thesite. The richness of he data enable us to control for several spuriousconfounds that have typically plagued empirical analysis of socialinteractions. Our results show evidence for significant positivefeedback in user generated content. We discuss the implications of theestimates for the management of the content and the growth of the network. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/31402 Title: Social Networks and Voting<br/><br/>Hoffman, Mitchell; Leon, Gianmarco<br/><br/>Abstract: This paper uses a randomized experiment to study whether social networksaect vote choice. In a ercely contested presidential election in Peruwith ten candidates, only 35% of subjects were aware how their friendsintended to vote. We compare people who were randomly informed how oneof their friends intended to vote to people who were randomly informedhow an un-named stranger intended to vote. We nd no evidence thatinforming people people how their friends intended to vote aects theirvote choice. Tue, 20 Dec 2011 21:01:25 GMT http://hdl.handle.net/2451/28427 Title: Social Networking and Individual Outcomes: Individual DecisionsandMarket Context<br/><br/>Ioannides, Yannis M. - Tufts University; Soetevent, Adriaan R. - University of Amsterdam and Tinbergen Institute<br/><br/>Abstract: This paper examines social interactions when social networking isendogenous. It employs a linear-quadratic model that accommodatescontextual effects, and endogenous local interactions, that is whereindividuals react to the decisions of their neighbors, and endogenousglobal ones, where individuals react to the mean decision in theeconomy, both with a lag. Unlike the simple V AR(1) structural model ofindividual interactions, the planner's problem here involvesintertemporal optimization and leads to a system of linear differenceequations with expectations. It highlights an asset-like property ofsocially optimal outcomes in every period which helps characterize theshadow values of connections among agents. Endogenous networking iseasiest to characterize when individuals choose weights of socialattachment to other agents. It highlights a simultaneity betweendecisions and patterns of social attachment. The paper also poses theinverse social interactions problem, asking whether it is possible todesign a social network whose agents' decisions will obey an arbitrarilyspecified variance covariance matrix. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/29456 Title: Social Interactions, Network Fluidity and Network Effects<br/><br/>Tucker, Catherine - MIT Sloan School of Management<br/><br/>Abstract: This paper asks how much the strength of network effects depends on thestability and structure of the underlying social network. I answer thisusing extensive microdata on all potential adopters of a firm's internalvideo-messaging system and their subsequent video-messaging. This firm'sNew York office had to be relocated due to the terrorist attacks of 2001which lead to a physical re-organization of teams in that city but notin other comparable cities. I study the consequences of this disruptionfor adoption of video-messaging and the size of network effects. I findevidence that generally network effects are based on direct socialinteractions. Potential adopters react to adoption only by people theywish to communicate with: They are not affected by adoption by otherpeople. However, when there is a disruption to the social network andcommunication patterns become less predictable, users become moreresponsive to adoption by a broader group of users. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/29507 Title: Shopping cost and brand exploration in online grocery<br/><br/>Pozzi, Andrea - Einaudi Institute for Economics and Finance<br/><br/>Abstract: This paper studies differences in consumers' grocery shopping behaviorwhen they shop online and in a brick-and-mortar store. To do so, Iassemble a new scanner dataset that tracks customers' grocery purchasesin-store and on the Internet. This allows comparison in behavior of thesame households, shopping in the same chain, for identical items and foridentical prices, eliminating many possible confounding factors. Idocument that brand exploration - the purchase of a brand not tried inthe past- is systematically more prevalent in-store than online. Ipropose three possible explana- tions for this finding: (i) shocks tothe instantaneous utility of time correlated with the decision to shoponline (ii) possibility to reduce shopping cost; and (iii) difficulty inassessing quality of unknown items while shopping online. I develop amodel of consumer behavior that allows me to quantify each effect. Ifind that all of them contribute to hamper trial of new brands online.The counterfactual shows that altering the design of the website toremove potential obstacles to new trials increases brand exploration by23%. More generally, in contrast to the conventional wisdom of theInternet reducing entry barriers, my work points to features of theonline environment that in certain contexts actually could make entry ofnew brands more diffcult. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28456 Title: Selling and Leasing Software with Network Externality<br/><br/>Zhang, Jennifer - University of Toledo; Seidmann, Abraham - University of Rochester<br/><br/>Abstract: Previous studies suggested that a monopoly durable goods seller can useleasing to effectively avoid the time-inconsistent problem raised byCoase Conjecture. This paper extends those previous works by examiningthe monopoly seller's selling and leasing strategy for a special type ofdurable good --- software. We look at a software vendor that can sell(at a posted price) or lease his product where as a lesser he guaranteesthat the lessees will always have the latest version of the software. Weaddress some of the specific issues of implementing the selling and/orleasing policies at the packaged software market, including the impactof network externality, upgrade compatibility, and commitment on pricingin a dynamic environment. We show that by properly defining theirpricing structure, software vendors can segment the market andsecond-degree price discriminate the consumers. We also demonstrate howsoftware vendors can manage the trade-offs of selling and leasing toachieve a higher profit as well as the corresponding welfare effect onthe consumers. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/29513 Title: Search, Design, and Market Structure<br/><br/>Bar-Isaac, Heski - NYU Stern School of Business; Caruana, Guillermo - CEMFI; Cunat, Vicente - London School of Economics<br/><br/>Abstract: The Internet has made consumer search much easier with consequences forcompetition, industry structure and product offerings. We explore theseconsequences in a rich but tractable model that allows for strategicdesign choices. We find a polarized market structure, where some firmschoose designs aiming for broad-based audiences, while others targetnarrow niches. Such an industry structure can arise even when all firmsand consumers are ex-ante identical. We perform comparative statics andshow the effect of a fall in search costs on the designs, market shares,prices, and profits of different firms. In particular, a fall in searchcosts, through the effect on product designs, can lead to higherindustry prices and profits. In characterizing sales distributions, ouranalysis is related to discussions of how the Internet has led to theprevalence of niche goods and the long tail and superstar phenomena. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28502 Title: Search Engine Advertising: Pricing Ads to Context<br/><br/>Goldfarb, Avi - University of Toronto; Tucker, Catherine - MIT<br/><br/>Abstract: Each search term put into a search engine produces a separate set ofresults. Correspondingly, each of the sets of ads displayed alongsidethe results is priced using a separate auction. We investigate how bidsfor these context-based ads depends on the difficulty of making a match.This contrasts with the existing literature that focuses on the effectof match quality. We examine advertising prices paid by lawyers for 139Google search terms in 195 locations. Other things being equal, thefewer searches there are on a term, the higher the price. To identify acausal relationship between match-difficulty and prices paid, we exploita natural experiment in 'ambulance-chaser' regulations across states.When lawyers cannot contact a client by mail and matching becomes moredifficult, the relative price per ad click is $0.93 higher. We check therobustness of this result by performing a falsification test using adifferent ambulance-chaser regulation. Our results suggest that pricesare higher for context-based ads when the difficulty of both online andoff-line matching increases. This highlights that a major reason whysearch advertising is profitable is because its use of context canmonetize the 'long tail' by reducing friction in the matching process. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28462 Title: Search Costs, Demand Structure and Long Tail in ElectronicMarkets:Theory and Evidence<br/><br/>Ghose, Anindya - NYU Stern School of Business; Gu, Bin - University of Texas at Austin<br/><br/>Abstract: It is well known that the Internet has significantly reduced consumers'search costs online. But relatively little is known about how searchcosts affect consumer demand structure in online markets. In this paper,we identify the impact of search costs on firm competition and marketstructure by exploring a unique theoretical insight that search costscreate a kink in aggregate demand when firms change prices. Thesignificance of the kink reflects the magnitude of online search costsand the kinked demand function provides information on how search costsaffect competition in the online market. Using a dataset collected fromAmazon and Barnes &amp; Noble, we find that search costs varysignificantly across online retailers. Consumers face low search costsfor price information from Amazon.com. It leads to a higher priceelasticity when the firm reduces prices than when it increases prices,increasing Amazon's incentive to engage in price competition. On theother hand, consumers face relatively higher search costs for priceinformation from Barnes &amp; Noble. This leads to a lower priceelasticity when Barnes &amp; Noble reduces prices than when it increasesprices, reducing Barnes &amp; Noble's incentive to engage in pricecompetition. We also find that search costs decrease with the passage oftime as the information about price changes dissipates among consumers,leading to increased price elasticity over time. Finally, we highlightthat search costs are lower for popular books compared to rare andunpopular books. These findings have implications for the impact of theInternet on the Long Tail phenomenon. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/29497 Title: Search and the City: Comparing the Use of WiFi in New York, Budapest and Montreal<br/><br/>Forlano, Laura - Yale Law School<br/><br/>Abstract: Over the past five years, the use of mobile and wireless technology inpublic spaces of cities around the country has grown exponentially.Recently, cities including Philadelphia, San Francisco, Boston,Minneapolis, and Austin have announced plans to build municipal wirelessnetworks. These projects make a number of assumptions about the payoffsof municipal wireless networks without the benefit of research on thecommunication practices of users. To date, there is little suchresearch. In addition, wireless technology &ndash; specifically,wireless fidelity or WiFi -- is often discussed as one of many ways toaccess the high-speed (broadband) Internet i.e. cable, digitalsubscriber line (DSL), fiber etc. Thus, there has been little analysisof the ways in which the use of the wireless Internet via WiFi maydiffer from that of the wireline Internet. In order to understand thepotential user patterns that will be observed with respect to emergingtechnologies, it is necessary to disaggregate research about the variousways of connecting to the Internet.This paper compares the results froma six-month survey of the use of WiFi hotspots in New York, Budapest andMontreal. It is hoped that further analysis of these survey results willcontribute to a more acute understanding of the ways in which the userpatterns of particular modes of Internet access may differinternationally. The major research questions addressed in this paperare: 1) How is WiFi being used in public spaces, by whom, where, forwhat purposes?; 2) How does the use of WiFi differ from othercommunication technology?; and, 3) How is the use of WiFi similar ordifferent across cities internationally? This paper makes the followingarguments based on the survey data: first, WiFi is an important factorin attracting people to specific locations; second, the use of WiFihighly localized in that it is often used to search for informationrelevant to one's geographic location; third, there are significantdifferences in the way that WiFi is used across a variety of locationsincluding cafes, parks and other public spaces; fourth, at present, WiFiusers are, for the most part, young, male and highly educated displayingthe characteristics of early adopters of technology; and, fifth, thereis a convergence in the ways in which WiFi is used internationally insome respects, however there are also important differences in thereasons for these uses as well divergence in other respects.Thesefindings may have an important impact in shaping current discussionsmunicipal wireless networks by helping to identify content, applicationsand services that can be delivered overmobile and wireless networks. Inaddition, the answers to these questions are vital to inform a widevariety of legal and public policy issues related to information andcommunication technologies in addition to being important to thedevelopment of content and applications for mobile and wirelesstechnologies. These include policies surrounding municipal wirelessnetworks, spectrum, universal service, community media and network neutrality. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28398 Title: Risk Attitudes and Internet Search Engines: Theory and Experimental Evidence<br/><br/>Garcia-Gallego, Aurora - Universitat Jaume I; Georgantzis, Nikolaos - Universitat Jaume I; Pereira, Pedro - Autoridade da Concorrencia; Pernias-Cerrillo, Jose C. - Universitat Jaume I<br/><br/>Abstract: This paper analyzes the impact on consumer prices of the size and biasesof price comparison search engines. We develop several theoreticalpredictions, in the context of a model related to Burdett and Judd(1983) and Varian (1980), and test them experimentally. The datasupports the model's predictions regarding the impact of the number offirms, and the type of bias of the search engine. The data does notsupport the model's predictions regarding the impact of the size of thesearch engine. We identified several data patterns, and developed aneconometric model for the price distributions. Variables accounting forrisk attitudes improved significantly the explanatory power of theeconometric model. Wed, 29 Oct 2003 22:58:59 GMT http://hdl.handle.net/2451/31441 Title: Risk and Reciprocity Over the Mobile Phone Network: Evidence from Rwanda<br/><br/>Blumenstock, Joshua; Eagle, Nathan; Fafchamps, Marcel<br/><br/>Abstract: A large literature describes how local risk sharing networks can helpindividuals smooth consumption in the face of idiosyncratic economicshocks. However, when an entire community faces a large covariate shock,and when the transaction costs of transfers are high, these risk sharingnetworks are likely to be less effective. In this paper, we document howa new technology &ndash; mobile phones &ndash; reduces transaction costsand enables Rwandans to share risk quickly over long distances. Weexamine a comprehensive database of person-to-person transfers of mobileairtime and find that individuals send this rudimentary form of&ldquo;mobile money&rdquo; to friends and family affected by naturaldisasters. Using the Lake Kivu earthquake of 2008 to identify the effectof a large covariate shock on interpersonal transfers, we estimate thata current-day earthquake would result in the transfer of between $22,000and $30,000 to individuals living near the epicenter. We further showthat the pattern of transfers is most consistent with a model ofreciprocal risk sharing, where transfers are determined by pastreciprocity and geographical proximity, rather than one of pure charityor altruism, in which transfers would be expected to be increasing inthe wealth of the sender and decreasing in the wealth of the recipient. Tue, 17 Jan 2012 21:41:55 GMT http://hdl.handle.net/2451/28426 Title: Retail Prices and Facility-Based Entry into the Telecommunications Market<br/><br/>Gabel, David - Queens College; Gideon, Carolyn - Tufts University<br/><br/>Abstract: There is growing sentiment that rate rebalancing to eliminate crosssubsidies between local business and local residential telephone marketsis necessary to induce efficient entry in the residential market. If theelasticity of supply with respect to the relative prices for businessand residential local service is high in both the local business andlocal residential markets, then the efficiency gains from rebalancingmay be large. Alternatively, other factors related to differences incharacteristics between business and residential local telephonemarkets, such as lower costs, lower elasticity of demand, and greaterwillingness-to-pay for quality or redundancy in the business segment oflocal telephone may be more important determinants of entry. In thispaper we simultaneously measure the elasticity of supply in the businessmarket with regards to the price of business services relative to theprice of residential service, using entry, economic and demographic dataa the wire center level. We find that business entry is driven by marketdemand and cost characteristics, and that the effect of cross subsidiesin prices on entry is less clear. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/31457 Title: Regulation and Performance of Communication and Information Networks<br/><br/>Faulhaber, Gerald; Madden, Gary; Petchey, Jeffrey Thu, 09 Feb 2012 20:27:28 GMT http://hdl.handle.net/2451/29485 Title: Recommender Systems and their Effects on Consumers: The Fragmentation Debate<br/><br/>Fleder, Daniel - The Wharton School of the University of Pennsylvania; Hosanagar, Kartik - The Wharton School of the University of Pennsylvania; Buja, Andreas - The Wharton School of the University of Pennsylvania<br/><br/>Abstract: Recommender systems are becoming integral to how consumers discovermedia. The value that recommenders offer is personalization: inenvironments with many product choices, recommenders personalize thebrowsing and consumption experience to each user's taste. Popularapplications include product recommendations at e-commerce sites andonline newspapers' automated selection of articles to display based onthe current reader's interests. This ability to focus more closely onone's taste and filter all else out has spawned criticism thatrecommenders will fragment consumers. Critics say recommenders causeconsumers to have less in common with one another and that the mediashould do more to increase exposure to a variety of content. Others,however, contend that recommenders do the opposite: they may homogenizeusers because they share information among those who would otherwise notcommunicate. These are opposing views, discussed in the literature forover ten years for which there is not yet empirical evidence. We presentan empirical study of recommender systems in the music industry. Incontrast to concerns that users are becoming more fragmented, we findthat in our setting users become more similar to one another in theirpurchases. This increase in similarity occurs for two reasons, which weterm volume and taste effects. The volume effect is that consumerssimply purchase more after recommendations, increasing the chance ofhaving more purchases in common. The taste effect is that, conditionalon volume, consumers buy a more similar mix of products afterrecommendations. When we view consumers as a similarity network beforeversus after recommendations, we find that the network becomes denserand smaller, or characterized by shorter inter-user distances. Thesefindings suggest that for this setting, recommender systems areassociated with an increase in commonality among users and that concernsof fragmentation may be misplaced. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/29496 Title: Recommendation Networks and the Long Tail of Electronic Commerce<br/><br/>Oestreicher-Singer, Gal - Tel-Aviv University and New York University; Sundararajan, Arun - New York University<br/><br/>Abstract: It has been conjectured that the peer-based recommendations associatedwith electronic commerce lead to a redistribution of demand from popularproducts or 'blockbusters' to less popular or 'niche' products, and thatelectronic markets will therefore be characterized by a 'long tail' ofdemand and revenue. In this paper, we develop a novel method to testthis conjecture and we report on results contrasting the demanddistributions of books in over 200 distinct categories on Amazon.com.Viewing each product as having a unique position in a hyperlinkednetwork of recommendations between products that is analogous to shelfposition in traditional commerce, we quantify the extent to which aproduct is in uenced by its recommendation network position by using avariant of Google's PageRank measure of centrality. We then associatethe average level of network influence on each category with theinequality in the distribution of its demand and revenue, quantifyingthis inequality using the Gini coefficient derived from the category'sLorenz curve. We establish that categories whose products are influencedmore by recommendations have significantly flatter demand distributions,even after controlling for variations in average category demand, thecategory's size and measures of price dispersion. Our empirical findingsindicate that doubling the average influence of recommendations on acategory is associated with an average increase in the relative demandfor the least popular 20% of products by about 50%, and a averagereduction in the relative demand for the most popular 20% by about 12%.We also show that this e&curren;ect is enhanced when there isassortative mixing in the recommendation network, and in categorieswhose products are more evenly influenced by recommendations. Thedirection of these results persist across time, across both demand andrevenue distributions, and across both daily and weekly demandaggregations. Our work offers new ideas for assessing the influence ofnetworks on demand and revenue patterns in electronic commerce, andprovides new empirical evidence supporting the impact of visiblerecommendations on the long tail of electronic commerce. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28436 Title: Rationalizing the E-Rate: The Effects of Subsidizing IT in Education<br/><br/>Ward, Michael R. - University of Texas at Arlington<br/><br/>Abstract: Starting in 1998, the E-Rate program has provided $2.25 billion tosubsidize Internet access in schools and libraries serving low incomepopulations in the US. I analyze the effect of E-Rate subsidies oneducational outcomes for Texas high schools over the 1994-2003 timeperiod. Consistent with previous economic analyses, I find few, if any,improvements in student achievements. I do find evidence thatexperienced teachers are reallocated within districts toward schoolsreceiving E-Rate grants. I also find evidence that the pool of collegeentrance exam takers is affected by E-Rate grants such that relying onaverage scores could lead to incorrect conclusions. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28419 Title: Quantifying the benefits of entry into local phone service<br/><br/>Economides, Nicholas - NYU Stern School of Business; Seim, Katja - University of Pennsylvania; Viard, V. Brian - Cheung Kong Graduate School of Business<br/><br/>Abstract: Local telecommunications competition was an important goal of the 1996Telecommunications Act. We evaluate the consumer welfare effects ofentry into residential local telephone service in New York State usinghousehold-level data from September 1999 to March 2003. We address theprevalence of nonlinear tariffs by developing a discrete/continuousdemand model that allows for service bundling and unobservable providerquality. We find that the average subscriber to the entrants&rsquo;services gains a monthly equivalent of $2.33, or 6.2% of her bill, inwelfare from competition. These gains accrue primarily from firmdifferentiation and new plan introductions rather than from price effects. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28518 Title: Quantifying the benefits of entry into local phone service<br/><br/>Economides, Nicholas - NYU Stern School of Business; Seim, Katja - University of Pennsylvania; Viard, V. Brian - Cheung Kong Graduate School of Business<br/><br/>Abstract: Local telecommunications competition was an important goal of the 1996Telecommunications Act. We evaluate the consumer welfare effects ofentry into residential local telephone service in New York State usinghousehold-level data from September 1999 to March 2003. We address theprevalence of nonlinear tariffs by developing a discrete/continuousdemand model that allows for service bundling and unobservable providerquality. We find that the average subscriber to the entrants' servicesgains a monthly equivalent of $2.33, or 6.2% of her bill, in welfarefrom competition. These gains accrue primarily from firm differentiationand new plan introductions rather than from price effects. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28384 Title: Quantifying Equilibrium Network Externalities in the ACH Banking Industry<br/><br/>Ackerberg, Daniel A. - University of Arizona and NBER; Gowrisankaran, Gautam - Washington University in St. Louis and NBER<br/><br/>Abstract: We seek to estimate the causes and magnitudes of network externalitiesfor the automated clearinghouse (ACH) electronic payments system, usinga panel data set on individual bank usage of ACH. We construct anequilibrium model of consumer and bank adoption of ACH in the presenceof a network. The model identifies network externalities fromcorrelations of changes in usage levels for banks within a network, fromchanges in usage following changes in market concentration or sizes ofcompetitors and from adoption decisions of banks outside the networkwith small branches in the network, and can separately identify consumerand bank network effects. We structurally estimate the parameters of themodel by matching equilibrium behavior to the data, using simulatedmaximum likelihood and a data set of localized networks, and use abootstrap to recover confidence intervals. The parameters are estimatedwith high precision and fit various moments of the data reasonably well.We find that most of the impediment to ACH adoption is due to largeconsumer fixed costs of adoption. The deadweight loss from the networkexternality is moderate: the optimal number of ACH transactions is about16% higher than the equilibrium level. Tue, 31 Dec 2002 22:58:59 GMT http://hdl.handle.net/2451/28438 Title: Quality Uncertainty And Adverse Selection In Sponsored Search Markets<br/><br/>Animesh, Animesh - University of Maryland; Ramachandran, Vandana - University of Maryland; Viswanathan, Siva - University of Maryland<br/><br/>Abstract: Sponsored search mechanisms, where advertisers bid for placement to beas close to the top in the listing of search results, are the fastestgrowing among online search models. Sponsored search in popular searchservices such as Google and Yahoo! employ an auction mechanism whereinfirms can bid, for a better placement in the (sponsored) search results,on relevant keywords used by consumers in their search process. Thisprovides an unprecedented opportunity to test some of the predictions ofearlier research relating quality and advertising, in the onlinesetting. While sponsored search mechanisms have been gaining popularity,they can potentially introduce a bias in the listing of search results.In particular, sponsored search mechanisms that enable low qualitybidders to be placed at the top of the search listings can adverselyaffect consumer welfare. Our study uses data from online sponsoredsearch auctions to examine the relationship between advertisers' qualityand their bidding strategies. Specifically we seek to understand ifadvertisers' bidding strategies differ across products characterized bydifferent degrees of quality-uncertainty. Our results indicate thatthere are significant differences in the bidding strategies of sellersof search goods as compared to sellers of experience and credence goods,and that there is significant adverse selection in product categoriescharacterized by greater uncertainty. We discuss the implications of ourfindings for consumers, advertisers, and intermediaries and providedirections for future research in this emerging context. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/29859 Title: Product Compatibility in Network Industries with Switching Costs<br/><br/>Chen, Jiawei - University of California, Irvine<br/><br/>Abstract: This paper investigates how switching costs affect product compatibilityand market dynamics in network industries. A reduction in the switchingcost makes the firms' products more attractive relative to the outsidegood, which diminishes the market expansion benefit of making productscompatible. As a result, the larger firm is more likely to vetocompatibility in order to maintain its installed base advantage over itsrival. Therefore, public policies that reduce switching costs in networkindustries can change the market outcome from compatible products toincompatible products. In the former, price competition is mild and themarket is often fragmented, whereas in the latter, there is fierce pricecompetition when firms are of comparable size and in the long run themarket is likely dominated by one firm. Thu, 29 Oct 2009 22:58:59 GMT http://hdl.handle.net/2451/28495 Title: Privacy Protection and Technology Diffusion: The Case of ElectronicMedical Records<br/><br/>Miller, Amalia R. - University of Virginia; Tucker, Catherine E. - MIT Sloan School of Business<br/><br/>Abstract: Some policymakers argue that consumers need legal protection of theirprivacy before they adopt interactive technologies. Others contend thatprivacy regulations impose costs that deter adoption. We contribute tothis growing debate by quantifying the effect of state privacyregulation on the diffusion of Electronic Medical Record technology(EMR). EMR allows medical providers to store and exchange patientinformation using computers rather than paper records. Hospitals may notadopt EMR if patients feel their privacy is not safeguarded byregulation. Alternatively, privacy protection may inhibit adoption ifhospitals cannot benefit from exchanging patient information with oneanother. In the US, medical privacy laws that restrict the ability ofhospitals to disclose patient information vary across time and acrossstates. We exploit this variation to explore how privacy laws affectwhether hospitals adopt EMR. Our results suggest that inhibition ofEMR's network benefits reduces hospital adoption by up to 25 percent. Wefind similar evidence when we control for the endogeneity of state lawsusing variation in signups to the 'Do Not Call' list. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28442 Title: Pricing of Complements and Network Effects<br/><br/>Economides, Nicholas - NYU Stern School of Business; Viard, V. Brian - Cheung Kong Graduate School of Business<br/><br/>Abstract: We discuss the case of a monopolist of a base good in the presence of acomplementary good provided either by it or by another firm. We assessand calibrate the extent of the influence on the profits from the basegood that is created by the existence of the complementary good. Weestablish an equivalence between a model of a base and a complementarygood and a reduced-form model of the base good in which network effectsare assumed in the consumers' utility functions as a surrogate for thepresence of direct or indirect network effects, such as complementarygoods produced by other firms. We also assess and calibrate theinfluence on profits of the intensity of network effects and qualityimprovements in both goods. We evaluate the incentive that a monopolistof the base good has to improve its quality rather than that of thecomplementary good under different market structures. Finally, based onour results, we discuss a possible explanation of the fact thatMicrosoft Office has a significantly higher price than Microsoft Windowsalthough both products have comparable market shares. Fri, 29 Oct 2004 22:58:59 GMT http://hdl.handle.net/2451/28454 Title: Pricing Digital Goods: Discontinuous Costs and Shared Infrastructure<br/><br/>Huang, Ke-Wei - NYU Stern School of Business; Sundararajan, Arun - NYU Stern School of Business<br/><br/>Abstract: We develop and analyze a model of pricing for digital products withdiscontinuous supply functions. This characterizes a number ofinformation technology-based products and services for which variableincreases in demand are fulfilled by the addition of 'blocks' ofcomputing or network infrastructure. Examples include internet service,telephony, online trading, on-demand software, digital music, streamedvideo-on-demand and grid computing. These goods are often modeled asinformation goods with variable costs of zero, although their actualcost structure features a mixture of positive periodic fixed costs, andzero marginal costs. The pricing of such goods is further complicated bythe fact that rapid advances in semiconductor and networking technologylead to sustained rapid declines in the cost of new infrastructure overtime. Furthermore, this infrastructure is often shared across multiplegoods and services in distinct markets. The main contribution of thispaper is a general solution for the optimal nonlinear pricing of suchdigital goods and services. We show that this can be formulated as afinite series of more conventional constrained pricing problems. We thenestablish that the optimal nonlinear pricing schedule with discontinuoussupply functions coincides with the solution to one specific constrainedproblem, reduce the former to a problem of identifying the optimalnumber of 'blocks' of demand that the seller will fulfil under theiroptimal pricing schedule, and show how to identify this optimal numberusing a simple and intuitive rule (which is analogous to 'balancing' themarginal revenue with average 'marginal cost'). We discuss the extent towhich using 'information-goods' pricing schedules rather than those thatare optimal reduce profits for sellers of digital goods. A firstextension includes the rapidly declining infrastructure costs associatedwith Moore's Law to provide insight into the relationship between themagnitude of cost declines, infrastructure planning and pricingstrategy. A second extension examines multi-market pricing of a set ofdigital goods and services whose supply is fulfilled by a sharedinfrastructure. Our paper provides a new pricing model which is widelyapplicable to IT, network and electronic commerce products. It alsomakes an independent contribution to the theory of second-degree pricediscrimination, by providing the first solution of monopoly screeningwhen costs are discontinuous, and when costs incurred can only beassociated with the total demand fulfilled, rather than demand fromindividual customers.; We develop and analyze a model of pricing for digital products withdiscontinuous supply functions. This characterizes a number ofinformation technology-based products and services for which variableincreases in demand are fulfilled by the addition of 'blocks' ofcomputing or network infrastructure. Examples include internet service,telephony, online trading, on-demand software, digital music, streamedvideo-on-demand and grid computing. These goods are often modeled asinformation goods with variable costs of zero, although their actualcost structure features a mixture of positive periodic fixed costs, andzero marginal costs. The pricing of such goods is further complicated bythe fact that rapid advances in semiconductor and networking technologylead to sustained rapid declines in the cost of new infrastructure overtime. Furthermore, this infrastructure is often shared across multiplegoods and services in distinct markets. The main contribution of thispaper is a general solution for the optimal nonlinear pricing of suchdigital goods and services. We show that this can be formulated as afinite series of more conventional constrained pricing problems. We thenestablish that the optimal nonlinear pricing schedule with discontinuoussupply functions coincides with the solution to one specific constrainedproblem, reduce the former to a problem of identifying the optimalnumber of 'locks' of demand that the seller will fulfil under theiroptimal pricing schedule, and show how to identify this optimal numberusing a simple and intuitive rule (which is analogous to 'balancing' themarginal revenue with average 'marginal cost'). We discuss the extent towhich using 'information-goods' pricing schedules rather than those thatare optimal reduce profits for sellers of digital goods. A firstextension includes the rapidly declining infrastructure costs associatedwith Moore's Law to provide insight into the relationship between themagnitude of cost declines, infrastructure planning and pricingstrategy. A second extension examines multi-market pricing of a set ofdigital goods and services whose supply is fulfilled by a sharedinfrastructure. Our paper provides a new pricing model which is widelyapplicable to IT, network and electronic commerce products. It alsomakes an independent contribution to the theory of second-degree pricediscrimination, by providing the first solution of monopoly screeningwhen costs are discontinuous, and when costs incurred can only beassociated with the total demand fulfilled, rather than demand fromindividual customers. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/29465 Title: Pricing and Multi-Market Contact in the Cable TV Industry<br/><br/>Seamans, Robert - University of California, Berkeley<br/><br/>Abstract: This paper links empirical literature on the use of price as an entrydeterring mechanism with literature on the effect of multi-marketcontact on competition. The analysis uses a dataset of cable TV systemprices to provide evidence that incumbent cable TV firms use price todeter entry by telecom overbuilders as well as cities with municipalutilities. There is also some evidence that multi-market contact withtelecom overbuilders results in lower prices. However, there is noevidence that incumbents use price to deter cable overbuilders. Inaddition to linking entry deterrence with multi-market contact, thisstudy has two other unique features. First, it establishes entrydeterrence using two techniques, one of which relies on theory byEllison and Ellison (2008) on non-monotonic price decreases in responseto entry probability. Second, it uses detailed price and channel dataat the service tier level. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/29520 Title: Price Wars in Two-Sided Markets: The case of the UK Quality Newspapers<br/><br/>Behringer, Stefan - Universitat Mainz; Filistrucchi, Lapo - Tilburg University and University of Florence<br/><br/>Abstract: This paper investigates the price war in the UK quality newspaperindustry in the 1990s. We build a model of the newspaper market whichencompasses demand for differentiated products on both, the readers andadvertisers side of the market, and profit maximization by fourcompeting oligopolistic editors who recognize the existence of anindirect network effect of circulation on advertising demand. Editorschoose first the political position, then simultaneously cover pricesand advertising tariffs. We contribute to the literature on two-sidedmarkets by endogenizing the political differentiation of newspapers in amodel with more than two firms. We simulate changes to market structurein order to explore which of the candidate explanations is most likelyto lie behind the observed price war. Wed, 29 Oct 2008 22:58:59 GMT http://hdl.handle.net/2451/28504 Title: Price Discrimination in Two-Sided Markets<br/><br/>Liu, Qihong - University of Oklahoma; Serfes, Konstantinos - Drexel University<br/><br/>Abstract: We examine the profitability and the welfare implications of pricediscrimination in two-sided markets. Platforms have information aboutthe preferences of the agents that allows them to price discriminatewithin each group. The conventional wisdom from one-sided horizontallydifferentiated markets is that price discrimination hurts the firms andbenefits consumers, prisoners' dilemma. Moreover, it is well-known thatthe presence of indirect externalities in two-sided markets canintensify the competition. Despite all these, we show that thepossibility of price discrimination, in a two-sided market, may actuallysoften the competition. Therefore, the implications of pricediscrimination from one-sided markets may not carry over to two-sidedmarkets. This is the case regardless of whether prices are public orprivate, although private prices boost profits. Our analysis also shedslight on the welfare properties of price discrimination in intermediategoods markets, such as Business-to-Business (B2B) markets. Sun, 29 Oct 2006 22:58:59 GMT http://hdl.handle.net/2451/28478 Title: Platform Competition: The Role of Multi-homing and Complementors<br/><br/>Carrillo, Juan D. - University of Southern California; Tan, Guofu - University of Southern California<br/><br/>Abstract: In this paper we present a model of platform competition in which twofirms offer horizontally differentiated platforms and a group ofcomplementors offers products that are complementary to each platform.Consumers can buy either or both platforms (single- or multihoming) andcomplementors can produce for either or both platforms (single- ormulti-production). We first characterize the pricing structure and findthat, in equilibrium, consumers are more likely to multihome as thedifferentiation of platforms decreases or as the number of complementorsfor either platform increases. We show that the platform and itscomplementors always benefit from an increase in the number ofcomplementors in their own platform. When single-homing arises inequilibrium, the platform and its complementors suffer from an increasein the number of complementors in the rival platform. We also study theincentives of the platform to integrate with its complementors, tocharge them a royalty or give a subsidy, and to sell its owncomplementary products to the rival platform. Sat, 29 Oct 2005 22:58:59 GMT http://hdl.handle.net/2451/29489 Title: Platform Competition, Compatibility, and Social Efficiency<br/><br/>Casadesus-Masanell, Ramon - Harvard Business School; Ruiz-Alisedaz, Francisco - Universitat Pompeu Fabra<br/><br/>Abstract: In their seminal 1985 paper, Katz and Shapiro study systemscompatibility in settings with one-sided platforms and direct networkexternalities. We consider systems compatibility when competingplatforms are two-sided and there are indirect network externalities todevelop an explanation why markets with two-sided platforms are oftencharacterized by incompatibility with one dominant player who maysubsidize access to one side of the market. Specifically, we modelcompetitive interaction between two providers of horizontallydifferentiated platforms that act as intermediaries between developersof platform-based products (applications) and users of such products. Wefind that the unique equilibrium under platform compatibility leads tohigher profits than the symmetric equilibrium under incompatibility.Notwithstanding, incompatibility naturally gives rise to asymmetricequilibria with a dominant platform that captures all users and earnsmore than under compatibility. Our model allows a detailed analysis ofsocial efficiency. We find that entry by developers is sociallyexcessive (insufficient) if competing platforms are compatible(incompatible) and that incompatibility generates larger total welfarethan compatibility when horizontal differences between platforms are small. Mon, 29 Oct 2007 22:58:59 GMT http://hdl.handle.net/2451/31399 Title: Platform Competition under Asymmetric Information<br/><br/>Halaburda, Hanna; Yehezkel, Yaron<br/><br/>Abstract: In the context of platform competition in a two-sided market, we studyhow exante uncertainty and ex-post asymmetric information concerning thevalue of a new technology aects the strategies of the platforms and themarket outcome. We nd that the incumbent dominates the market by settingthe welfare-maximizing quantity when the dierence in the degree ofasymmetric information between buyers and sellers is signicant. However,if this dierence is below a certain threshold, then even the incumbentplatform will distort its quantity downward. Since a monopoly incumbentwould set the welfare-maximizing quantity, this result indicates thatplatform competition may lead to a market failure: Competition resultsin a lower quantity and lower welfare than a monopoly. We consider twoapplications of the model. First, we consider multi-homing. We nd thatmulti-homing solves the market failure resulting from asymmetricinformation. However, if platforms can impose exclusive dealing, thenthey will do so, which result in market ineciency. Second, the modelprovides a new argument for why it is usually entrants, not incumbents,that bring major technological innovations to the market. Tue, 20 Dec 2011 16:50:00 GMT http://hdl.handle.net/2451/28441 Title: Piggybackers and freeloaders: platform economics and indirect liabilityfor copyright infringement<br/><br/>Orbach, Barak Y. - University of Arizona<br/><br/>Abstract: Many, if not most, copyright cases of alleged indirect liability forcopyright infringement arise in platform markets: One of the litigatingparties is a market intermediary that connects members of differentdistinct groups. Indirect liability for copyright infringement is stillcontroversial and frequently litigated. This paper develops ananalytical framework that is applicable to many of the debated cases.The presented framework offers strong justifications for the impositionof indirect liability for copyright infringement in platform markets andoffers tools to establish certain elements of indirect liability forcopyright infringement. Fri, 29 Oct 2004 22:58:59 GMT