Browsing by Author "P. S. Giridharan"

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    Market Dominance in the Telecommunications Services Industry
    (1995-03-01T00:00:00Z) P. S. Giridharan
    In this paper, we analyze the telecommunications services market. This is a fast-expanding market, with Microsoft's entry into it with its Microsoft Network providing additional impetus, and raising policy issues. We look for the market structure that will arise from the decisions of the service providers (in terms of product characteristics and pricing) and the customers, all acting in their own interests. We show that when positive externalities are dominant, we can have only market-cornering at equilibrium. This result holds even when the products are differentiated. (We are already seeing near-complete market-cornering in the similar market for operating systems). But, that does not deter any of the competitors from entering the fray in the first place, since all have positive expected profits. We derive the probability that each will be the player to corner the market. We also show the non-intuitive result that when externalities are dominant, the providers do not have to worry about externalities at all in taking their decisions. We have also introduced a new solution concept called ``odds of dominance'' in analyzing our game. We also derive sufficient conditions for restricting the number of possible outcomes to three out of several potential ones. These conditions are satisfied by the common assumptions.