DYNAMIC MONOPOLY PRICING WITH NETWORK EXTERNALITIES

In this paper, we study the optimal dynamic monopoly pricing for a goo d which exhibits positive network externalities. When network external ities are of sufficient magnitude, we show that, contrary to the Cease theorem, (1) there is no time inconsistency problem; (2) subgame perf ect equilibrium prices increase as time passes. From this point of vie w, positive network externalities allow the monopoly to commit itself credibly to increasing future prices.