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Reflections4:NetworkEffects
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Reflections4:NetworkEffects
DueDate:17thFeb2015,12:00SGT
Weswitchgearsabitthisweek,andconsiderifwecanapplyourlessonsthisweektoestablished
"offline"industries.Asalways,pleaseopenaseparatethreadforeachofyourresponses.Doreferto
theGuidelinesforyoursubmissionsifyou'reunclear.
Inapaper[1]intheAntitrustLawJournal,alegalscholarhadoncearguedthefollowing:
CocaColaandPepsiColadrinkersbenefitfromthenetworkoftheirfellowconsumersbe
causeCokeandPepsiarewidelyavailableinrestaurantsandinvendingmachines.
1. Givenwhatyouvelearntthisweekonnetworkeffects,brieflydiscussthepositiveandnegative
externalitiesthatmayormaynotexistamongsoftdrinkconsumers.Whatisthenetworkthat
mayexistinthiscontext?Whatfactorsmayincentivizeexistingconsumersintobringingmore
usersintothisnetwork
2. SoftdrinkmanufacturerssuchasCokeorPepsitypicallyengagethirdpartybottlersinto
manufacturingtheirproductandgettingthemtoselltoconsumersdirectly.Whythen,isthisnot
anexampleofatwosidedmarket?
3. NewentrantssuchasSodaStreamhavetriedtoenterthesoftdrinkspacethroughinnovative
productsthatallowcreationoffizzydrinksinconsumerhomes.Givenwhatyouhavelearntthis
week,whatnewstrategy,intermsofnetworksorplatforms,canSodaStreamadopttomaximize
theirsalesandrevenue?Bebriefinyourdescription.
[1]Muris,TimothyJ.TheFTCandtheLawofMonopolization,AntitrustLawJournal,Vol.67,No.3,
2000http://papers.ssrn.com/paper.taf?abstract_id=235403(Retrieved9thFeb2015)[Note:thisisnot
requiredreading.]
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Reflections4:NetworkEffects
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