Author(s)

Tomohiko Konno

Institute of Advanced Study, Waseda University, Tokyo, Japan.

We study goods (or service) with network effect. Social network services are examples. An existing service has an advantage over new one because of the network effect. We study the condition that new goods (or service) replace the existing one, and show that the condition depends on the underlying network structures. For this purpose, we study a coordination game with network structure. If more than half of the players change their strategies, then new strategy beats the existing one in regular networks. On the other hand, if very small number of players with large degree changes their strategies, then the new strategy beats the existing one in scale-free networks.

Local Social Interaction, Network Effect, Network Heterogeneity, Scale-Free Networks, Games on Networks, Coordination Games

Konno, T. (2015) Should a New Good Replace Existing Ones? A Network Approach. Theoretical Economics Letters, 5, 584-589. doi: 10.4236/tel.2015.54068.