Economics of Networks
Network Economics and the "New Economy"
Last Updated: 10/19/2000
Stern School of Business, Executive MBA program
Prof. Nicholas Economides
Fall 2000
Tel. (212) 998-0864, Fax: (212) 995-4218
e-mail: neconomi@stern.nyu.edu
WWW:
http://www.stern.nyu.edu/networks
Course page:
http://www.stern.nyu.edu/networks/exmba/NewEconomy.html
Course Description
The subject of this course is Network Economics
and the "New Economy."
We will start with an discussion of strategic analysis,
game theory, and the economics of network industries. We will then
focus on competition in network industries, including the issues of
compatibility, network externalities, and critical mass.
We will then apply network economics to telecommunications
and the Internet and discuss current industry structure.
Finally we will apply network economics to the computer industry
and discuss in detail the issues in the current Microsoft trial.
Texts
We will mainly rely on class notes. Click for
Network Economics Notes
Game Theory Notes
The Microsoft Antitrust Case For MBA Students
Lecture 1
- Introduction to the course
- Review of traditional economics
- Demand and Supply
- Producers’, and Total Surplus
- Description of the "New Economy"
- Features
- Increasing returns
- Network externalities
- Skyrocketing valuations
- Fast change – Internet time
- High growth
- High inequality of market shares
Lectures 2 & 3
- Networks and network structure
- Network externalities
- Nature and cause
- Complementarity
- Compatibility
- Effects
- Upward-sloping demand
- Inequality in market shares and profits
- Importance of installed base
- Lock-in
- Entry barriers
- Examples
- Incompatibility
- Beta v. VHS
- CD v. LP
- Compatibility
- FAX
- Telecommunications
Readings
-
Network Economics Notes
- Economides, Nicholas
The Economics of Networks,
International Journal of Industrial Organization,
vol. 16, no. 4, pp. 673-699 (October 1996).
- Economides, Nicholas, and Charles Himmelberg,
(1995),
"Critical Mass and Network Evolution in Telecommunications,"
in Gerard Brock (ed.), Telecommunications
Policy Research Conference Selected Papers 1995.
Lecture 4
- Application of network economics to telecommunications
- Local, long distance, wireless
- Mandatory interconnection
- The phone wars of the early 20th century
- Interconnection Pricing
- The breakup of AT&T
- The Telecommunications Act of 1996
- What is says
- Problems in its implementation
- Voice v. data
- The Internet
- Internet telephony; voice over IP
- Competition issues of the Internet backbone
- High bandwidth solutions
- AT&T’s cableTV vision
- AOL-TimeWarner
- DSL
- LMDS, MMDS
- Satellite
- Recent mergers
The Telecommunications Act of 1996, especially sections 251-2 and 271-2
Economides, Nicholas (1999),
"The Telecommunications Act of 1996 and Its Impact,"
Japan and the World Economy
Economides, Nicholas (1999),
US Telecommunications Today, April 1999.
Lecture 5
- Application of network economics to the computer industry
- The market for PC operating systems
- The role of compatibility
- Microsoft
- Antitrust suits
- Allegations
- Defense
- Rulings
- Remedies
Back to the top page
(Internet Site for Network Economics)
Copyright © 2000, N. Economides.