Product quality, network effects, and efficiency of network markets

The objective of our study is to capture the roles of product quality and network effects in the success and efficiency of network markets under strategic settings that defined in terms of market share as a strategic factor and profit as a financial indicator. The research paper shows that the efficiency of network markets depends heavily on the phase adjustment of competition models and the balance of network effects and product quality among enterprises. the network market is always efficient in price competition, but not true in quantity competition when the network effect difference is sufficiently large or/and the quality difference is relatively small, then network effects may play a perverse role in market efficiency. The main findings reveal that network effects do not always enhance the role of quality in market efficiency and market growth. The research outcomes point to high quality enterprises' attitude toward compatibility with enterprises with large network effects. This research paper also offers insights on government intervention to correct the distorted impacts of sufficiently large network effects on the efficiency of network markets.

Automated summary

The objective of this study is to examine the roles of product quality and network effects in the success and efficiency of network markets. The research paper demonstrates that the efficiency of network markets relies on the adjustment of competition models and the balance between network effects and product quality. The findings suggest that network effects may not always enhance market efficiency and growth, and high quality enterprises should consider compatibility with enterprises with large network effects. The paper also provides insights on government intervention in network markets.