Network dynamics: competition and welfare Original Research Article

Making use of a simple quadratic model of network externalities, the author studies the nature and bionomics of dynamic network competition. The author establishes that whether or not the network grows into the socially preferable equilibrium depends on the initial condition, dynamic competition between homogeneous networks selects the single survivor that may or may not be the fittest, and if there is product differentiation there is a possibility that two networks coexist in equilibrium better serving the society by doing so.