| dc.description.abstract | In this thesis, we examine the presence of direct network effects in two-sided markets.
Online social networks like Facebook are examples of firms which exhibit both direct and
indirect network effects. These effects have important implications for firms’ incentives to
strategically differentiate. While the literature on each type of network effect is extensive,
studies of firms who exhibit both these characteristics are few. We survey the literature
on direct network effects and two-sided markets separately. We then add to the literature
by presenting a Hotelling model with endogenous location where both types of network
effects are present. We present two versions of the model, a one-sided duopoly model with
direct network effects, and a two-sided model with direct network effects and duopoly
competition on one side. We find that both direct and indirect network effects incentivize
the firms to differentiate less, implying fiercer competition. | nb_NO |
