Impact Of Network Externalities Research Articles

Should the pricing or advertising decision come first in a supply chain with a network externality?

Purpose This paper aims to study how the timing of these decisions affects the total profit and the individual profits of the two agents. Design/methodology/approach This paper study a supply chain for a network good where there is a manufacturer and a retailer. The manufacturer determines its wholesale price and its share in the retailer’s advertising cost while the retailer decides the retail price and the advertising cost. Findings This paper finds that a stronger network externality leads to higher prices and higher advertising efforts. This increases the profits of both manufacturer and retailer, but the manufacturer’s share of advertising costs depends on the order in which the supply chain enterprise make their decisions, the strength of network externality and the effect of advertising determines which decision timeline results in a higher price and greater advertising effort. The manufacturer prefers the price decision to be made before the advertising decision, while the retailer prefers these decisions to be made simultaneously. Research limitations/implications Although this paper studies the price and advertising decision-making order preferences of channel members based on network externalities, this research can also be expanded from the following aspects based on network effects. First, network externality affects advertising cooperation between both parties in the situation such that the pricing power of retail prices is transferred from the retailer to the manufacturer and the retailer relies on revenue sharing (revenue sharing contract, nonwholesale price contract. Second, the manufacturer dominates the issues in the supply chain, but in reality, a retailer can also be the dominator or there are no dominators (Nash equilibrium). Finally, it is possible to consider pricing and advertising decisions in situations where two manufacturers or retailers compete. Practical implications When the price is reasonable, advertising investment is the main determinant of product sales. The greater the intensity of network externalities the more retailers will be willing to invest in advertising. An increase in the intensity of network externalities may not necessarily enhance manufacturers’ motivation or cooperative advertising, but it depends on the decision-making sequence. The strength of network externalities determines the decision-making sequence preferences of supply chain channel members whose preferences vary leading to conflicts of interest. Originality/value The impact of cooperative advertising or decision sequence on corporate decision-making has not been considered. To fill this gap, the paper integrates network externality and supply chain cooperative advertising models, focusing on the impact of network externality on pricing and advertising decisions, as well as on the sequence of decisions.

Study on Data Supply Chain Pricing Decision Considering Network Externalities

Nowadays, data has become an important productive factor in the world. Data as an asset to management and realizing its value are important factors for its flowing smoothly. However, how to price the data scientifically and reasonably has been a difficult and key problem for the data element market development. After analyzing the transaction process of data products from data resource acquisition to production and sales, a three-level data supply chain consisting of data providers, data trading platforms and users is constructed. In this chain, government subsidies for data trading platforms are considered. Based on that, a centralized and a decentralized differential game pricing model of data supply chain under the influence of network externalities are proposed respectively. The impact of network externalities and government subsidy elasticity coefficients, among others, on the two decision models is analyzed from a theoretical perspective.

Pricing Decisions for Competitive Ride-Hailing Platforms with the Combination of Inner-Group and Inter-Group Network Externalities

Based on two-sided market theory, this paper has studied the pricing problem of ride-hailing platforms with a combination of inter-group network externality and inner-group network externality. Two scenarios of user structure are considered. In scenario 1, both travellers and drivers are single-homing. In scenario 2, travellers are single-homing while drivers are multi-homing. Moreover, time sensitive factors and driver’s commission rate are introduced to reflect the characteristics of transport industry. Finally, the impact of network externality, time sensitivity, driver’s commission rate and entry cost on ride-hailing platform pricing, user scale and profits are analysed. The results show that inter-group network externality and inner-group network externality have a negative effect on platform prices charged to both travellers and drivers. However, when travellers are multi-homing, the price charged to travellers is positive with respect to the inter-group network externality from drivers. In the relationship between travellers’ scale and inter-group network externality, inner-group network externality is positive. Further, in both scenarios, the network externalities from the two sides affect platform profits negatively.

Measuring network effects of digital industrial platforms: towards a balanced platform performance management

Firms increasingly establish digital industrial platforms to cope with the adaption of the industrial internet of things (IIoT) paradigm. The tremendous success of digital platforms in many platform-mediated industries can be traced back to the ignition of network externalities. However, the impact of network externalities is still under discussion in the IIoT domain, and their measurement remains a challenge for platform companies. This paper outlines how network effects were measured in the existing research, deriving three dimensions of network effects for IIoT: (1) ecosystem utility, (2) complementarity, and (3) compatibility. This conceptualization is further used in an empirical study with practitioners from digital industrial platform organizations to enable performance measurement of network effects in IIoT by developing 20 key performance indicators (KPIs). Based on the empirical study results, this paper proposes a framework for balanced platform management. Utilizing the goals of a balanced scorecard, the framework emphasizes the trade-off between the contradicting perspectives on costly network effect simulation and platform earnings that platform managers need to balance. The KPI portfolio can support platform managers in implementing the framework.

Analysis of Internet Rent from the Perspective of Marx's Rent Theory: A Case Study of Mobile Internet Applications

People are now tightly connected through mobile Internet applications, whether they are platform owners, renters, business professionals, or users. The presence of Internet Rent is concealed between platform owners and renters of mobile Internet applications, according to Marx's rent theory. Owners of platforms lease out data land and charge Internet Rent to renters. Similar to land rent, Internet Rent demonstrates differential rent. However, due to the instantaneous replicability of data flow activities and the impact of network externalities, the former still differs from the latter in terms of social relationships, the existence of Absolute Rent, and the form of Differential Rent II.

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities in Nigeria

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities in Nigeria

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

The impact of network externalities and altruistic preferences on carbon emission reduction of low carbon supply chain

This paper explores the manufacturer's carbon emission reduction in the presence of network externalities and altruistic preferences. Existing literature mainly analyzes the impact of government regulations and firms' behavior characteristics on manufacturers' decisions, while little literature investigates the role of network externalities and altruistic preferences in promoting carbon emission reduction of manufacturers. Our results show that network externalities and altruistic preferences are conducive to improving manufacturers' profits and carbon emission reduction levels. However, we find that manufacturers' carbon emission reductions are more likely to be optimal without network externalities and altruistic preferences when the cost of low-carbon technologies is low, and consumer preferences are high. Interestingly, when the low-carbon technologies cost is high, the combined effect of network externalities and altruistic preferences is more favorable for manufacturers to implement carbon emission reductions. However, when the cost of low-carbon technologies is moderate, we find that the combined effect of network externalities and retailers' altruistic preferences does not always increase the level of carbon emission reductions. In addition, we also find that network externalities or altruistic preferences enhance manufacturers' ability to afford the costs of low-carbon technologies, which implies that manufacturers are more inclined to reduce carbon emissions compared to scenarios without network externalities and altruistic preferences.

Effect of Network Externality on the Price Competition in Vertically Differentiated Market

The information products dramatically reduce the production costs of vertically differentiated products. Information products are also more likely to be affected by network externalities. Thus the proliferation of digital products is increasing the interests in network externality and vertical product differentiation. In step with this trend, the impact of network externalities on price competition in vertically differentiated markets has been continuously studied. Existing studies related to this topic have assumed that network externalities increase consumers' willingness to pay per unit quality. The results show that higher quality products are affected more by network externality. However, network externality is essentially a concept affected by the size of the consumer, not a concept associated with quality. In this work, unlike previous studies, we present a new market model that reflects the essential definition of network externality. Based on the proposed market model, we derive both simultaneous and sequential Nash equilibria and analyze them numerically. The main results obtained from the analysis can be summarized as follows. First, network externalities primarily increase the demand for low-quality products and have a secondary impact on the demand for high-quality products. Second, the larger the quality difference between products, the more profitable they are. It also has been shown that sequential pricing methods are more advantageous in terms of revenue than simultaneous pricing method.

Pricing and Bundling Strategies for Competing Mobile Phone Supply Chains With Network Externality

In mobile phone supply chains, consumers can choose handsets and telecommunication services as a bundled package or buy handsets and services independently. This article develops a multi-agent simulation model to explore price, subsidy and bundling decisions for competing mobile phone supply chains with network externality, where each chain includes one mobile phone manufacturer and one service operator. There are two bundling strategies: free or bundled. The results indicate that: 1) if the impact of network externality is not too small, then competitive differentiation can be formed when one party adopts a bundled one. If bundled scenario is adopted by both, the total profit is reduced. Consequently, both service operators and manufacturers choose (accept) different bundling strategies; 2) network externality and consumer heterogeneity both increase the advantage of bundled scenario in the asymmetric setting; 3) when the effect of network externality is sufficiently small, free scenario is dominant; and 4) consumer heterogeneity can alleviate competition in the symmetric settings.

Consumer Experience and Adoption Intention of Internet of Things Services: The Impact of Network Externalities

Consumer Experience and Adoption Intention of Internet of Things Services: The Impact of Network Externalities

The impact of network externalities on acceptance and use of an app of peer-to-peer platform: a study with Uber users

In recent years, sharing business models have emerged based on the use of technology. Thus, this study used the constructs of UTAUT2 and Network Externalities, in order to analyze how the network externality moderates the acceptance of an app used in peer-to-peer platform. A survey was conducted with 243 Uber users and data were analyzed through the structural equation modeling. As a result, it has been found that all factors influence user acceptance in a positive way. However, the network externality moderates this influence when it comes to factors as facilitating conditions, habit, and social influence.

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

Drivers of Mobile Payment Acceptance: The Impact of Network Externalities

Intertemporal mixed bundling strategy of information products with network externality

Abstract This paper proposes a two-period model of intertemporal mixed bundling for two information products with network externality, in which a profit-maximizing monopolist offering two information products in the first period decides the optimal time of bundle release and the adoption of “Complete My Bundle” option. “Complete My Bundle” is an option offered by App Store, with which customers can enjoy the bundle discount even if they purchase all components within the bundle in different time. We demonstrate that the seller should promptly release the bundle in the first period when network externality is moderate-to-high, or the bundle release should be delayed to the second period when network externality is low. The impact of network externality on optimally pricing individual products and bundles depends on the time of bundle release. Offering “Complete My Bundle” option is advantageous in a large number of situations when the seller makes an optimal choice for the time of bundle release. Our analysis provides insightful explanations to real-world practices of intertemporal mixed bundling strategies, and also supports the optimal choices for intertemporally bundling information products.

Identifying Effective Online Service Strategies: The Impact of Network Externalities and Organizational Lifecycle Stage

Identifying Effective Online Service Strategies: The Impact of Network Externalities and Organizational Lifecycle Stage

How network externality leads to the success of mobile instant messaging business?

The current research investigates the relationship among the factors influencing the success of mobile instant messaging (MIM) businesses: namely, network externalities, network quality, network intimacy, user satisfaction, and usage intention. The patterns of the data collected in China and South Korea confirmed that the impact of network externalities on MIM user satisfaction is mediated by network quality and network intimacy. That is, although network externalities alone can directly influence customers' usage intentions, greater network externalities can be a more valuable strategic asset for mobile service companies when accompanied by a higher level of network quality and greater intimacy with their customers. These findings suggest that MIM businesses should pay attention to increasing the size of their networks to building and promoting both user-to-user intimacy and perceived quality in these networks.

An Integrated Spectrum and Information Market for Green Cognitive Communications

A database-assisted TV white space network can achieve the goal of green cognitive communication by effectively reducing the energy consumption in cognitive communications. The success of such a novel network relies on a proper business model that provides substantial incentives for all parties involved. In this paper, we propose an integrated spectrum and information market for a database-assisted TV white space network, where a geolocation database acts as an online platform providing services to both a spectrum market and an information market. We model the interactions among the database operator, the spectrum licensee, and the unlicensed users as a three-stage sequential decision process. Specifically, Stage I characterizes the negotiation between the database and the spectrum licensee, in terms of the commission for the licensee to use the spectrum market platform, Stage II models the pricing decisions of the database and the spectrum licensee, and Stage III characterizes the subscription behaviors of the unlicensed users. Analyzing such a three-stage model is very challenging due to the co-existence of positive and negative network externalities in the information market. We explicitly characterize the impact of network externalities on the equilibrium behaviors of all parties involved. We also analytically show that the spectrum licensee can never get a market share larger than half in the integrated market. Our numerical results further show that the proposed integrated market can outperform the pure information market in terms of network profit up to 87%.

Contracting for Competitive Supply Chains under Network Externalities and Demand Uncertainty

Based on network externalities and demand uncertainty environment, supply chain competition model is built; we identify the valid mechanism for the alternative range of profit-sharing contracts and also analyze the effect of product substitutability coefficient and network externalities on the alliance and profit-sharing contract. The results show that the vertical alliance contributes profit improvement to both the manufacturer and the retailer when the impact of network externalities on the product substitutability is not strong. However, vertical alliance will be out of operation when the effect of network externalities on the product substitutability is strong.