Study on pricing strategy choice of firms with network externality
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    Abstract:

    Based on the Hotelling model with endogenous pricing strategy, this paper analyzes the pricing strategy choice of firms with network externality in the game of duopoly setting. Firms can choose uniform pricing or discriminatory pricing. The results show that firms choose either uniform pricing or discriminatory pricing when the network effect does not exist. However, when the network effect exists, the equilibrium condition of discriminatory pricing is relaxed. Discriminatory pricing has a cost advantage. As a result, firms prefer discriminatory pricing. Meanwhile, if the consumers pay more attention to the product' s characters, more firms will choose discriminatory pricing

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