TY - JOUR
T1 - Two-part tariffs in the online gaming industry
T2 - The role of creative destruction and network externalities
AU - Meagher, Kieron
AU - Teo, Ernie G.S.
PY - 2005/10
Y1 - 2005/10
N2 - Playing computer games online is a fast growing, billion dollar industry which has received little academic attention. The industry exhibits a number of interesting economic features. The industry structure is determined by creative destruction as in Aghion and Howitt (1992) [Aghion, P., Howitt, P. 1992. A model of growth through creative destruction, Econometrica, 60(2), 323-351], with game makers experiencing market power within a genre until the game is superceded. Furthermore, the attractiveness of playing a game online depends on the existence of opponents (positive network externalities) while technical and reputational problems eventually arise (negative network externalities). We model the choice of two-part tariffs by a monopolist under creative destruction and network externalities and derive conditions for the multiple equilibria which currently exist in the industry.
AB - Playing computer games online is a fast growing, billion dollar industry which has received little academic attention. The industry exhibits a number of interesting economic features. The industry structure is determined by creative destruction as in Aghion and Howitt (1992) [Aghion, P., Howitt, P. 1992. A model of growth through creative destruction, Econometrica, 60(2), 323-351], with game makers experiencing market power within a genre until the game is superceded. Furthermore, the attractiveness of playing a game online depends on the existence of opponents (positive network externalities) while technical and reputational problems eventually arise (negative network externalities). We model the choice of two-part tariffs by a monopolist under creative destruction and network externalities and derive conditions for the multiple equilibria which currently exist in the industry.
KW - Computer games
KW - Creative destruction
KW - Internet
KW - Network externalities
KW - Two-part tariff
UR - http://www.scopus.com/inward/record.url?scp=25144500990&partnerID=8YFLogxK
U2 - 10.1016/j.infoecopol.2005.02.003
DO - 10.1016/j.infoecopol.2005.02.003
M3 - Article
SN - 0167-6245
VL - 17
SP - 457
EP - 470
JO - Information Economics and Policy
JF - Information Economics and Policy
IS - 4
ER -