The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Network Goods (Empirical Studies)

  • Neil Gandal
Reference work entry


A network effect exists if the consumption benefits of a good or service increase with the total number of consumers who purchase compatible products. A growing empirical literature examines technological adoption of products with network effects. The early literature mainly addressed the question of whether network effects are indeed significant; this work typically employed reduced form models. Later literature employed structural methodology, which can address aspects of firm strategy, such as incentives to provide compatible products. Key issues in the empirical work on network industries are examined.


Hedonic prices Logit models of individual choice Network effect (empirical studies) Product differentiation 

JEL Classifications

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Neil Gandal
    • 1
  1. 1.