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Strategic Alliance and Profit Sharing in the Internet Market with Network Effects  

Oh, Jeong-Hun (고려대학교 국제대학원)
Publication Information
Asia pacific journal of information systems / v.16, no.3, 2006 , pp. 229-241 More about this Journal
Abstract
In this paper, we develop three stage non-cooperative game models to analyze the alliance strategies of companies in internet markets where network effects are present. Regardless of its market share, an internet company's strategic alliance appears to be a superior strategy. The analysis also identifies profit sharing structures in the internet market where a smaller and unknown company is enforced to split its own profits with a larger and well-known company. It is shown that the amount of profit sharing grows as the size of network effects becomes larger.
Keywords
Strategic Alliance; Profit Sharing; Internet Company; Network Effects;
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