How Well Does the Market Handle Network Effects?

8 September 2008 at 9:03 am Leave a comment

| Peter Klein |

Quite well, according to Dan Spulber’s paper “Consumer Coordination in the Small and in the Large: Implications for Antitrust in Markets with Network Effects,” out recently in the Journal of Competition Law and Economics (June 2008). Dan distinguishes between network effects in small- and large-numbers bargaining situations; Coasean bargaining can solve the problem in the former while Hayekian “spontaneous order” can emerge in the latter. The paper also contains a useful, up-to-date summary of the network effects literature. Highly recommended!

Entry filed under: - Klein -, Innovation, Institutions, Law and Economics, New Institutional Economics, Papers, Recommended Reading.

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