This paper uses a model of system product monopoly to examine the supporting services approach in network economics. We find that the monopoly sets the software price at the average cost of developing each variety of software. Furthermore, if the function defined for "love of software variety" exhibits too much "love of variety of software," then there exists only the boundary solution that corresponds to full market coverage. We also show that if the market is partially covered, then there always exist positive network externalities. However, if the market is fully covered, then network externalities vanish.
|Number of pages||10|
|Journal||NETNOMICS: Economic Research and Electronic Networking|
|State||Published - 2008|
- Market coverage
- Network externalities
- System product
- The supporting services approach