Network Externalities Research Articles

Impact of 5GTechnology on Mobile Internet Usage in Japan

Purpose: To aim of the study was to analyze the impact of 5G technology on mobile internet usage in Japan. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The rollout of 5G technology in Japan has led to a 35% increase in mobile internet usage, with users enjoying faster speeds and improved online experiences. This enhancement supports high-bandwidth applications like video streaming and gaming, and benefits businesses by facilitating remote work and innovative services such as augmented reality (AR) and the Internet of Things (IoT). However, substantial infrastructure investments are needed to ensure widespread coverage and reliability. Unique Contribution to Theory, Practice and Policy: Diffusion of innovations theory, technology acceptance model (TAM) & network externalities theory may be used to anchor future studies on impact of 5G technology on mobile internet usage in Japan. Practically, businesses and mobile service providers in Japan can leverage 5G to develop and deploy innovative services such as augmented reality (AR) applications, real-time gaming experiences, and immersive virtual communication platforms. Policymakers can develop frameworks that facilitate fair competition among telecom operators while promoting investment in 5G infrastructure.

Robotics Integration in Manufacturing: Case Study of South Korea

Purpose: Aim of the study was to analyze the robotics integration in manufacturing: case study of South Korea. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Robotics integration in South Korean manufacturing has revolutionized industry, boosting efficiency, productivity, and global competitiveness. Key sectors like automotive and electronics have seen significant benefits, including reduced labor costs, enhanced product quality, and faster production cycles. This advancement has also spurred innovation in robotics technology, making South Korea a leader in this field globally. Unique Contribution to Theory, Practice and Policy: Diffusion of innovations theory, technology acceptance model (TAM) & network externalities theory may be used to anchor future studies on robotics integration in manufacturing: case study of South Korea. Develop practical guidelines for integrating robotics into diverse manufacturing sectors. South Korea's experience underscores the importance of sector-specific customization and scalability in robot deployment. Establish regulatory frameworks that balance innovation with safety and ethical considerations in robotic manufacturing. South Korea's proactive regulatory policies support industry standards for robot safety and data privacy, fostering a conducive environment for technological innovation.

Impact of Digital Content Quality and Network Externalities on the Development of Young Consumers’ Online Brand Trust and Loyalty

Studies have shown that young consumers continue to be the target of digital marketing communications. They are also a source of revenues from online platforms that provide digital content. This research aimed to investigate whether young consumers’ online brand trust and online brand loyalty would be significantly influenced by such independent variables as creators’ digital content quality and network externalities. The study employed purposive sampling of 402 Thai undergraduate respondents who regularly view contents from their followed or subscribed channels. The research results were statistically analyzed using Structural Equation Modeling. The analysis revealed that creators’ digital content quality (.745, p < .001) and network externalities (.152, p < .001) had a significant impact on online brand trust. Furthermore, online brand trust (.960, p < .001) also had a significant impact on online brand loyalty. The findings provide empirical evidence for social media and digital marketing communications. In addition, the findings reveal that enhancing trust is still crucial to branding.

An empirical examination of user adoption of internet of things in the brazilian context

In the knowledge economy Internet of Things (IoT) has been calling researchers’ attention and interest. The IoT is expanding the concept of communication as it exceeds the Internet paradigm and connects many objects in a network. All this transformation causes an economic phenomenon called network externality in which the value of goods is linked to the installed base of the products. Additionally, the growth of mobile technologies and the use of the Internet has made information privacy an urgent issue for emerging technologies, like the ones related to IoT services. For this reason, the main goal of this study is to understand the influence of network externalities and information privacy concerns on users' attitude and continued intention to use IoT services. The model was empirically evaluated by applying a survey and Confirmatory Factor Analysis. Results indicate that the issues related to the popularity of IoT use are not associated with the ease of use, but information privacy is a concern that is relevant to users.

Environmental R&D risk choices with network externalities and emission tax in a differentiated duopoly

AbstractThis paper investigates the optimal choice of firms’ environmental R&D (ER&D) risk in a duopoly market with network externalities and emission tax. Considering consumers’ expectations on the overall network size, we analyze two cases in our model: rational expectations and output commitments. The analysis shows that the ER&D risk increases with the intensity of network externalities and emission tax rate under both rational expectations and output commitments. We also find the ER&D risk is higher under output commitments than under rational expectations. Moreover, whether the private optimum is higher or lower than the social optimum depends on the relationship between the emission tax rate and the marginal environmental damage. Finally, the aforementioned conclusions remain unaffected by alterations in the manner in which competition is carried out, and the ER&D risk is higher under Bertrand competition than under Cournot competition.

Competition and industrial policy in the 21st century

Abstract Large fixed costs and (direct and indirect) network externalities generate barriers to entry and high markups for winners in the digital industry. The potential for high prices, low innovation and abuses of dominant position as well as the contribution to rising inequality raise the question of how countries should regulate the industry. The tech giants’ dominance does not confront us with an unpalatable choice between laissez-faire and populist interventions. The commentary explains economic stakes, considers desirable adaptations of regulation in the digital age and draws some conclusions for policy reform.

Does immigration increase crime? The advantage of dynamic threshold models with finer geographic units

This study investigates whether immigration and crime rates are positively related, by applying dynamic panel threshold models to fine geographic units. This is distinct from previous studies, in which static and continuous models are applied to coarse geographic units. This analysis reveals that the immigration-crime relationship has structural breaks (or discontinuities). The favorable ethnic network externalities on crime emerge after the immigrant share reaches a certain level in the community. This analysis also shows that the immigration-crime relationship observed in fine geographic units disappears when coarsely classified units are used. If geographic aggregation obscures heterogeneity among cities, the immigration-crime relationship is underestimated. These results suggest the advantage of dynamic threshold models with fine geographic units compared to traditional static and continuous models with coarse geographic units when discussing the immigration-crime relationship.

The Role of Informative Advertising in Aligning Preferences Over Product Design

Abstract This article explores the relationship between product design and advertising, traditionally viewed as distinct business decisions. I build upon the seminal work of Matutes and Regibeau (1988. “Mix and Match: Product Compatibility Without Network Externalities.” The RAND Journal of Economics 19 (2): 221–34), where firms produce components that combine to form product systems, and introduce the necessity for firms to advertise their products to create consumer awareness. I find that a firm’s incentive to advertise increases with product compatibility. Greater product compatibility reduces competition, encouraging firms to broaden their market presence through advertising. Contrary to Matutes and Regibeau, when advertising influences product awareness, consumers prefer products with moderate compatibility over those that are entirely incompatible. Consequently, advertising aligns the compatibility preferences of both firms and consumers.

Collusive Stability with Relative Performance and Network Externalities

Collusive Stability with Relative Performance and Network Externalities

Balancing Variety and Quality: Examining the Impact of Benefit‐Linked Cross‐Subsidization on Multisided Platforms

AbstractMultisided platforms face a fundamental trade‐off: should they ease entry for a larger number of providers of complementary products or services (complementors) to join the platform and benefit from cross‐side network externalities, or should they limit entry to maintain complementors’ incentives to provide high‐quality offerings? We contend that a specific cross‐subsidizing pricing strategy – where the amount of subsidy to complementors is explicitly linked to the overall revenue they generate on the other side of the platform – may mitigate this trade‐off. Using data from the airport industry, we demonstrate that following a reduction of airlines’ entry barriers, airports that subsidize airlines, based on the aforementioned scheme, can boost their financial performance and maintain traffic composition in favour of legacy airlines, which bring passengers who spend more in airport shops. Our findings shed light on how cross‐subsidization may balance the variety and quality of complementors and their offerings on multisided platforms.

Value-added services and e-commerce platform competitiveness: a game theoretic approach

PurposeIn response to the intense competition in the platform economy, e-commerce platforms are actively introducing value-added services to maintain their competitiveness. However, how effective these value-added services are in fulfilling this purpose remains unclear. This paper explores how value-added services can enhance e-commerce platform competitiveness, measured by both user scale and reputation, considering the effect of network externalities.Design/methodology/approachA bilateral e-commerce platform with potential high-quality sellers and low-quality sellers on one side and potential buyers on the other side was chosen as research setting. Game theory models are constructed to simultaneously consider the behaviors of all actors (including sellers, buyers and the platform).FindingsOn the one hand, to increase the seller scale, basic services play a substituting role in determining the effect of value-added services. On the other hand, to increase the buyer scale and improve platform reputation, basic services play a fundamental role in determining the effect of value-added services. Furthermore, the higher the loss rate of the product value, the bigger the room for providing value-added services. With increasing loss rate of the product value, participating buyers who are attracted by value-added services are the fastest growing indicators; this indicates that the most significant effect of value-added services is its increase in the buyer scale.Practical implicationsBasic services determine the lower limit of platform competitiveness, while value-added services set the upper limit. The results of this paper can instruct different types of platforms to enhance their competitiveness in different ways.Originality/value(1) While previous studies on how to enhance platform competitiveness only considered scale or reputation separately, this paper applies a new perspective of platform competitiveness, namely the improvement of both the seller scale/buyer scale and platform reputation. (2) According to the characteristics of bilateral platforms, game theory models are constructed to explore how value-added services can enhance platform competitiveness considering both positive and negative network externalities. (3) The existing literature studies basic services and value-added services in a fragmented state; this paper contributes to research on value-added services by considering the mutual effect between basic and value-added services.

A theoretical framework for platform-to-platform cooperation: a multi-case study from China

PurposeThis study explores the factors that influence platform-to-platform cooperation (PPC) and designs a theoretical framework for platform research.Design/methodology/approachThis multi-case study includes a combination of exploratory and explanatory case studies.FindingsFrom the internal factor perspective, channel integration capability, technology-based order matching capability and service innovation capability positively affects the PPC. From the perspective of external factors, the impact of a new platform entry on the PPC depends on market power and complementarities between platforms in the supply and value chains. Diversity of demand also has a positive effect on the PPC, which is moderated by network externalities. It is worth noting that the incumbent platform prefers to diversify its services for collaborating platforms with a higher level of cooperation. In addition, the higher diversity of demand, the stronger the service innovation capability, which indirectly impacts cooperation positively.Originality/valueThe PPC has gained immense popularity in recent years. However, no scholars have investigated the factors influencing the PPC decisions, which warrants further exploration. This study sheds light on the factors and mechanisms that influence the PPC from both internal and external perspectives.

Decision and Coordination of an E-commerce Supply Chain Considering Returns and Network Externalities

Decision and Coordination of an E-commerce Supply Chain Considering Returns and Network Externalities

Price regulation, network externality, and product innovation strategies: A dynamic analysis

AbstractFor many high‐tech and Internet‐related products, consumers' utility depends partly on the scale of user groups, which is called network externality. This phenomenon plays a crucial role in shaping firms' innovation strategies, especially in markets with price regulation. This paper aims to investigate a monopolist's dynamic product innovation problem in a price‐regulated market exhibiting network externality. We identify the sufficient conditions guaranteeing the existence of optimal steady‐state equilibrium. Our analysis mainly shows the following: (i) the product quality and network size move in opposite directions along the path to the steady‐state equilibrium; (ii) the equilibrium result of product innovation increases with the regulated price but decreases with the intensity of network externality; (iii) the social‐welfare maximizing path of product innovation can be replicated by a dynamic price regulation regime, involving a premium on quality and a premium or a penalty on network size. Numerical experiments are performed to characterize the dynamic patterns of product innovation. We find that firms with high brand power prefer adopting mild product innovation strategy while for firms with low brand power, almost constant high‐quality strategy is better.

Incumbent inertia, innovativeness, and performance (dis)advantages: A demand-side learning perspective

Strategies of incumbent firms have received considerable attention in marketing and across business disciplines, but findings regarding performance (dis)advantages and innovativeness are mixed. Prior studies on supply-side sources (factors internal to the firm) of incumbent inertia disadvantages are more prevalent than those on demand-side factors, which relate to a firm’s customers and may explain potential incumbent advantages. We introduce an integrated demand-side framework to incumbent inertia, recognizing how the supply- and demand-side factors interrelate through learning mechanisms. On the one hand, incumbent firms learn and develop various routines and assets that influence their product strategies, typically reflecting inertia and incremental innovation. At the same time, customers learn about products in the market, forming preferences that reflect switching costs and network externalities (demand-side factors). Although an incumbent can gain advantages from demand-side effects, this could accelerate the onset of supply-side disadvantages. We present a set of research propositions that specify critical effects, and examine implications for incumbent strategies.

ICT and Service Exports: An Empirical Investigation for South Asia

Finance, transportation, communication, wholesaling, and other business services depend on the services industry. Services and their subservices contribute to various economic activities and may also boost economic growth by improving other enterprises. Therefore, service export determinants must be studied. Endogenous growth theory underpins human capital buildup in commerce and also this theory provides ground for technical advancement and learning by doing to boost productivity and trade. Endogenous growth and network externalities theories underpin ICT in trade. Therefore, this study analyzes the impact of ICT on service exports along with human capital and trade openness as an explanatory variables in selected South Asia. Panel data from 2005 to 2020 is collected for selected South Asian nations. Panel cointegration tests confirmed the long run relationship between variables when panel data order was confirmed. Panel fully modified least squares is used for long run estimates and results indicate that ICT and human capital boost South Asian service exports. Governments should improve internet access, cell phone and broadband infrastructure, digital payments, and e-commerce. These countries should also collaborate on SAARC human capital development.

Positive, Negative, and Amplified Network Externalities in Platform Markets

Positive, Negative, and Amplified Network Externalities in Platform Markets

How to animate learners to persist in learning massive open online courses? An application of the stimulus-organism-response paradigm

Purpose The purpose of this study is to propose a research model based on the stimulus–organism–response (S–O–R) model to examine whether network externality, personalization and sociability as environmental feature antecedents to learners’ learning engagement (LE) can influence their learning persistence (LP) in massive open online courses (MOOCs). Design/methodology/approach Sample data for this study were collected from learners who had experience in taking MOOCs provided by the MOOC platform launched by a well-known university in Taiwan, and 371 usable questionnaires were analyzed using structural equation modeling in this study. Findings This study proved that learners’ perceived network externality, personalization and sociability in MOOCs positively affected their cognitive LE, psychological LE and social LE elicited by MOOCs, which jointly led to their LP in MOOCs. The results support all proposed hypotheses, and the research model accounts for 76.2% of the variance in learners’ LP in MOOCs. Originality/value This study uses the S–O–R model as a theoretical base to construct learners’ LP in MOOCs as a series of the inner process, which is affected by network externality, personalization and sociability. It is worth noting that three psychological constructs including cognitive LE, psychological LE and social LE are used to represent learners’ organismic states of MOOCs usage. To date, hedonic/utilitarian concepts are more often adopted as organisms in previous studies using the S–O–R model, and psychological constructs have received lesser attention. Hence, this study’ contribution on the application of capturing psychological constructs for completely expounding three types of environmental features as antecedents to learners’ LP in MOOCs is well documented.

Digitization, Automation, Network Externalities, and Effectiveness - Firm-level Evidence from Taiwan

This study utilizes constructed firm-level panel data encompassing Taiwanese manufacturing firms from 1999, 2000, and 2002. We endeavor to examine the relationship between the adoption of digital and automated technologies by applying the seemingly unrelated bivariate probit model. Furthermore, digital capital possesses a distinctive characteristic that sets it apart from traditional inputs-it has the potential to generate significant economic externalities. Consequently, in addition to incorporating the relationship between the adoption of digital and automated technologies into our model, this study also investigates the e-commerce externalities within and between industries.

Agglomeration Externalities vs. Network Externalities: Impact on Green Technology Innovation in 283 Chinese Cities

The prominence of agglomeration externalities (AEs) and network externalities (NEs) in urban sustainable development has intensified in recent times, with advances in transportation infrastructure and information technology acting as key accelerators. Despite the scholarly attention they receive, the specific spillover effects that these externalities exert on green technology innovation (GTI) remain under-explored. In an effort to bridge this knowledge gap, the present study employs a spatial Durbin model to scrutinize, spanning a decade from 2011 to 2021, the impact and spatial spillover of AEs and NEs on GTI across 283 Chinese cities of prefecture level and above. The findings reveal the following: (1) AEs exert a U-shaped influence on GTI, initially inhibiting it, before ultimately fostering its growth. (2) NEs are found to consistently promote GTI. (3) The spatial spillover effects of AEs on GTI are significantly positive, while those from NEs are not statistically significant. (4) The influences of AEs and NEs on GTI exhibit marked regional variations. This study extends the research scope on the factors influencing GTI by examining the role of AEs and NEs, thereby aiming to offer valuable insights for enhancing the level of GTI.