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| The Strategy of Product Positioning and Entry Timing of Competing Firms under the Condition of Network Externalities |
| CHEN Ting，HOU Wenhua |
| Nankai University, Tianjin, China |
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Abstract This study analyzes the strategy of product positioning and entry timing of two firms that sequentially enter into a competitive market with network effect by establishing a continuous time model and noncooperative models of price and product positioning under the framework of Hotelling methodology. We analyze the influence of factors such as market growth rate, discount rate, network externality intensity and other parameters on Nash equilibrium. Finally, a numerical example was carried out to confirm correctness and validity of the theoretical analysis. It shows that the network externality intensity is an important factor affecting the positioning and entry timing of firms, and its mechanism is closely related to the market growth rate. Further, the impact mechanism of consumer travel costs on the profits of the two firms is not the same, and the impact on the profits of first-entrant is more complex.
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Received: 02 January 2018
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