Journal Article

Competition Between Networks: A Study of the Market for Yellow Pages

Marc Rysman

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 71, issue 2, pages 483-512
Published in print April 2004 | ISSN: 0034-6527
Published online April 2004 | e-ISSN: 1467-937X | DOI: https://dx.doi.org/10.1111/0034-6527.00512
Competition Between Networks: A Study of the Market for Yellow Pages

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  • Market Structure, Firm Strategy, and Market Performance

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This paper estimates the importance of network effects in the market for Yellow Pages. I estimate three simultaneous equations: consumer demand for usage of a directory, advertiser demand for advertising and a publisher's first-order condition (derived from profit-maximizing behaviour). Estimation shows that advertisers value consumer usage and that consumers value advertising, implying a network effect. I find that internalizing network effects would significantly increase surplus. As an application, I consider whether the market benefits from monopoly (which takes advantage of network effects) or oligopoly (which reduces market power). I find that a more competitive market is preferable.

Keywords: L14; M37

Journal Article.  14038 words.  Illustrated.

Subjects: Marketing ; Market Structure, Firm Strategy, and Market Performance

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