Economics Working Papers

Publication Date

7-16-2021

Number

21009

Abstract

We study endogenous growth in the presence of domestic and international network externalities. In our model, network externalities provide natural protection to first movers and incentivize disruptive innovations without the need for patent protection. Domestic and global growth depends on the extent of network externalities, international compatibility costs, and anti-trust policies. We find that traditional anti-trust policies may lead to unintended outcomes. Policies such as banning price discrimination or collusion may reduce economic growth. In particular, price discrimination and collusion could increase economic growth when network externalities are large in relation to compatibility costs.

JEL Classification

O11, O19, O31, O33, O38, O40

Version History

Original Release Date: July 16, 2021

Departments

Department of Economics, Iowa State University

File Format

application/pdf

Length

42 pages

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