Direct and indirect network effects are equivalent: A comment on “Direct and Indirect Network Effects: Are They Equivalent?”

B-Tier
Journal: International Journal of Industrial Organization
Year: 2012
Volume: 30
Issue: 6
Pages: 708-712

Authors (2)

Church, Jeffrey (not in RePEc) Gandal, Neil (Tel Aviv University)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Clements (2004) makes the following two claims: (i) unlike direct network effects, increases in the size of the market do not, in the case of indirect network effects, make standardization more likely, but (ii) indirect network effects are associated with excessive standardization. We show in Clements' framework that neither of these results are correct: standardization is more likely as the number of software firms increases and when the type of market equilibrium is unique – there are only multiple networks or only standardization – there is never excessive standardization, but there could be insufficient standardization, just as is the case with direct network effects.

Technical Details

RePEc Handle
repec:eee:indorg:v:30:y:2012:i:6:p:708-712
Journal Field
Industrial Organization
Author Count
2
Added to Database
2026-01-25