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Institute of Business and Economic Research
Competition Policy Center
University of California, Berkeley
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Competition or Predation? Schumpeterian Rivalry in Network Markets
Joseph Farrell, Economics Department, University of California, Berkeley
Michael Katz, Haas School of Business, Department of Economics, University of California, Berkeley

Download the Paper (481 K, PDF file) - August 1, 2001 Tell a colleague about it.
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ABSTRACT:
We explore the logic of predation and rules designed to prevent it in markets subject to network effects. Although, as many have informally argued, predatory behavior is plausibly more likely to succeed in such markets, we find that it is particularly hard to intervene in network markets in ways that improve welfare. We find that imposition of the leading proposals for rules against predatory pricing may lower or raise consumer welfare, depending on conditions that may be difficult to identify in practice.

SUGGESTED CITATION:
Joseph Farrell and Michael Katz, "Competition or Predation? Schumpeterian Rivalry in Network Markets" (August 1, 2001). Competition Policy Center. Paper CPC01-023.
http://repositories.cdlib.org/iber/cpc/CPC01-023

 
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