Pricing strategy in competitive oligopoly market with network externality

In this paper, we examined the price and welfare effect of price discrimination in a differentiated goods oligopoly market with network externality. And we compare in the equilibrium price, profit and output between the discriminated pricing and uniform pricing case. We also discussed the effect of network externality on the equilibrium result. We show that competitive price discrimination and network externality may intensify competition and the price discrimination increase the social welfare under oligopoly market with network externality. If firms differ in which markets they target for aggressive pricing strategy and competitive firm's reaction is strong, prices in all markets may fall. So both firms agree on the strategies of setting the uniform pricing.