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Title: Strategic Product Pre-announcements in Markets with Network Effects
Authors: Choi, Jay Pil - Michigan State University
Kristiansen, Eirik Gaard - Michigan State University
Nahm, Jae - HKUST, Hong Kong
Keywords: product pre-announcements, network effects, cheap talk, reputation
Issue Date: 2005
Series/Report no.: NET Institute Working Paper;05-09
Abstract: It is a widely adopted practice for firms to announce new products well in advance of actual market availability. The incentives for pre-announcements are stronger in markets with network effects because they can be used to induce the delay of consumers' purchases and forestall the build-up of rival products' installed bases. However, such announcements often are not fulfilled, raising antitrust concerns. We analyze the effects of product pre-announcements in the presence of network effects when firms are allowed to strategically make false announcements. We also discuss their implications for consumer welfare and anti-trust policy.
Appears in Collections:NET Institute Working Papers Series

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