The information products dramatically reduce the production costs of vertically differentiated products. Information products are also more likely to be affected by network externalities. Thus the proliferation of digital products is increasing the interests in network externality and vertical product differentiation. In step with this trend, the impact of network externalities on price competition in vertically differentiated markets has been continuously studied. Existing studies related to this topic have assumed that network externalities increase consumers' willingness to pay per unit quality. The results show that higher quality products are affected more by network externality. However, network externality is essentially a concept affected by the size of the consumer, not a concept associated with quality. In this work, unlike previous studies, we present a new market model that reflects the essential definition of network externality. Based on the proposed market model, we derive both simultaneous and sequential Nash equilibria and analyze them numerically. The main results obtained from the analysis can be summarized as follows. First, network externalities primarily increase the demand for low-quality products and have a secondary impact on the demand for high-quality products. Second, the larger the quality difference between products, the more profitable they are. It also has been shown that sequential pricing methods are more advantageous in terms of revenue than simultaneous pricing method.

1. 서 론
2. 기본 시장모형
3. 수직차별화된 시장모형
4. 동시적 Nash 균형해 분석
5. 순차적 Nash 균형해 분석
6. 결 론
References

• Hyung-Rae Cho(경상대학교 공과대학 산업시스템공학부) | 조형래
• Minho Rhee(경상대학교 공과대학 산업시스템공학부) | 이민호 Corresponding Author