Positive Network Externalities and Negative Environmental Externalities in a Differentiated Duopoly With Entry Fee‐Refund Policy

Bibliographic Data

ID21287544
AuthorsDi Wu (0000-0002-1269-4260, Institute of International Economics, School of Economics Nankai University Tianjin China, corresponding author), Jen-Yao Lee (0000-0002-9943-5084, National Kaohsiung University of Science and Technology), Jen‐Yao Lee (Department of International Business National Kaohsiung University of Science and Technology Kaohsiung Taiwan), Leonard F S Wang (0000-0001-5202-2867, Center for Global Operation and Enterprise Development National Kaohsiung University of Science and Technology Kaohsiung Taiwan, corresponding author)
Year2025
Volume84
Issue5
Pages773-779
Publication date2025-04-15
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueAmerican Journal of Economics and Sociology (JOURNAL)
Journal identifiersISSN: 0002-9246 • E-ISSN: 1536-7150
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ajes.12631
OpenAlexW4409517977
LanguageEN
References cited16

Most of the studies on the implications of externalities rarely consider the coexistence of positive network externalities and negative externalities. This paper examines the effect of net externalities in price competition and the effectiveness of the entry fee‐refund policy. We show that the positive network externalities improve profits, consumer surplus, and social welfare, while negative externalities reduce them. The implementation of an entry fee‐refund policy reduces firms' profits, but further improves consumer surplus and social welfare. An increase of positive network externalities makes such policy more effective, but the effect is weakened by negative externalities

Business · Cournot competition · Duopoly · Economics · Environmental economics · Environmental policy · Externality · Industrial organization · Microeconomics · Network effect · Consumer Market Behavior and Pricing · Digital Platforms and Economics · Merger and Competition Analysis

Tools

Open DOI