Review of Economic Studies Vol. 71 No. 2 2004
Competition Between Networks: A Study of the Market for Yellow Pages
Abstract
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.
- DOI
- 10.1111/0034-6527.00512
- Volume
- 71
- Issue
- 2
- Pages
- 483-512
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref