Quality Strategies in Network Markets
研究了网络市场中企业同时设定价格与质量的问题，发现均衡选择标准会影响经典的Spence效应是否成立，并基于风险优势标准推导出新的质量策略。
This paper studies network market problems in which firm(s)/platform(s) sets quality in addition to price. A well-established result in the network economics literature is that a profit-maximizing firm concerns only how quality is valued by the marginal consumer but not by inframarginal consumers, aka the Spence effect/distortion. For markets with strong network effects under which multiple market-tipping equilibria exist, I show that the validity of the previous result depends on the choice of the equilibrium selection criterion. Precisely, I show that all criteria commonly used in this literature give rise to the Spence effect, whereas the well-justified risk dominance criterion in game theory and its generalizations do not. Novel quality strategies are derived based on the latter criteria. This paper was accepted by Joshua Gans, business strategy.