The Value of Expectations and Hype For Platforms

Network effects (direct or indirect) create the possibility of multiple (stable) equilibrium market configurations

What determines which equilibrium market configuration prevails?

  • EXPECTATIONS!

What determines/influences expectations?

  • Path-dependence (winner in last generation oftentimes expected to win in the current generation)
  • Platforms might use non-price coordination instruments to affect expectations in their favor: e.g. First-party games/applications/content
  • Public announcements & commitments (if feasible)

Here’s the link to the slides.

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