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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/29493
Title: Ad-sponsored Business Models and Compatibility Incentives of Social Networks
Authors: Zhu, Feng - University of Southern California
Keywords: Ad-sponsored; Compatibility; Social networks; Business models
Issue Date: 2008
Series/Report no.: Net Institute Working Paper;08-20
Abstract: This paper examines social networks' incentives to establish compatibility under fee and ad-sponsored business models. I analyze the competition between two social networks and show that compatibility is only possible when the two networks are ad-sponsored. I also find that even when both networks are ad-sponsored, a network with a significant installed-base advantage may choose not to be compatible when the cost from sharing the market outweighs the benefit from additional ad profits. Finally, compatibility also requires a significant number of single-homing users. The results are consistent with empirical observations of social networks and suggest that increased adoption of ad-sponsored business models may lead to many de-facto standards in high-technology industries.
URI: http://hdl.handle.net/2451/29493
Appears in Collections:NET Institute Working Papers Series

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