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Articles

Duopoly Competition of Quality Based on Expected Network Size

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  • School of Management, University of Science and Technology of China, Hefei 230026, China

Received date: 2012-11-03

  Revised date: 2013-04-15

  Online published: 2015-03-18

Abstract

Concerning a product with network effects, the paper studies how duopoly firms compete on quality when the expected network size is affected mainly by the quality level. A two-stage game model is adopted to analyze this problem. It shows that market leader gains greater market share than expected network size, and market followers gets smaller market share than expected network size. For product with weak network effects, when network effects increase, product quality differentiation intensifies. And there are similar situation with also price and profit differentiation. When network effects strength is low enough, market followers gets greater profit for late-mover advantage. For product with strong network effects, market leader will get first-mover advantages getting more profit.

Cite this article

WU Chun-xu, WANG Qin, XU Chuan-yong . Duopoly Competition of Quality Based on Expected Network Size[J]. Chinese Journal of Management Science, 2015 , 23(3) : 82 -89 . DOI: 10.16381/j.cnki.issn1003-207x.2015.03.010

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