The competition of user networks: Ergodicity, lock-ins, and metastability

Bernd W. Woeckener

No 127, Tübinger Diskussionsbeiträge from University of Tübingen, School of Business and Economics

Abstract: This paper models the competition of user networks as a continuous-time Markov process. It presents a dynamic version of the Discrete Choice Analysis with state-dependent choice probabilities. Among other things, we show that the network competition can be characterized by the coexistence of lock-in regimes and a 'metastable' state - i.e. a state which is a probability maximum for a finite period of time. Then, unlike in the case of ergodicity or of simple lock-in scenarios, the networks can coexist for a considerable period of time, although the market is a natural monopoly.

Keywords: Ergodicity; Lock-in; Metastability; Network effects; Networks (search for similar items in EconPapers)
JEL-codes: D11 L10 (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuedps:127

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