Monopolies on the Rise: How Network Effects Shape Market Concentration
The article explores how market share changes over time by looking at how network effects and economies of scale influence competition. The study shows that these factors can lead to a monopoly, multiple firms co-existing, or market instabilities. Additionally, the initial differences in costs and preferences among firms affect how long it takes for market shares to stabilize, with higher initial variances leading to higher concentration in the market. This research helps us understand how markets evolve in a networked economy.