How to avoid monopoly:Connectivity and market shareOA

We consider dynamic competition between two platforms in a market with network externalities.In a framework with exogenous connectivity,there exists a unique symmetric equilibrium point when the strength of network externalities is lower than a threshold.When the strength exceeds an upper threshold,one platform captures almost the entire market at the equilibrium state.Furthermore,we analyze the role of endogenous connectivity:We find that the market share of any platform will not exceed the golden ratio√5-1/2,and social welfare is improved when connectivity cost is low.