Technical Appendix

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**Equilibrium Reaction Correspondence Curve**

The authors of "Network Externalities, Competition and Compatibility" derive the following: For any Fulfilled Expectations
Cournot Equilibrium (FECE), if the output of firm *i* is equal to *x*, then the combined output of all the
firms outside of that firm's network can be described by the firm's equilibrium reaction correspondence equation:

where A is a constant associated with the number of consumers that are willing to enter the market, m is the number
of firms in firm *i*'s network, and *v(y)* is the externality function. *v(y)* can be any function, as
long as it satisfies the following conditions: *v'>0, v"<0,* and lim[*v'(y)*] = 0 as y->infinity. For the
base-case in the tutorial, we chose the simplest possible function that satisfies these conditions:

Furthermore, in the base-case, *A* and *β* take on the following values:

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