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|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|
|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.|
|Appears in Collections:||NET Institute Working Papers Series|
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