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The Economics of Network Industries Hardcover – 15 Jan 2001


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'The Economics of Network Industries is the first textbook devoted exclusively to the analysis of markets in which the utility of consumers increases with the number of others purchasing the same (i.e. compatible) product.' Managerial and Decision Economics

'… the value of the undertaking is undisputable …'. Weltwirtschaftliches Archiv (Review of World Economics)

Book Description

This book introduces upper-level undergraduates, graduate students, and researchers to the latest developments in network economics. The book conveys the essential features of how strategic interactions between firms are affected by network activity, as well as covering social interaction and its influence on consumers' choices of products and services.

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Amazon.com: 3 reviews
32 of 34 people found the following review helpful
Network economics in one solid and compact book 13 July 2001
By Mikko Valimaki - Published on Amazon.com
Format: Paperback
This is an original academic textbook for network economics. Oz Shy starts the book by making some reasonable claims on his discipline at large: scientific papers in economics are too technical and use unnecessary amounts of calculus. Though the book is very analytical and covers a wide scope of issues, prerequisites are at a considerably low level. Because the book uses game theory and logical reasoning instead of calculus, it is accessible to readers with different backgrounds. This book will be in good use at least with the students of economics and engineering.
The book starts from the basic economics of networks and then analyses various networked industries from hardware to software and airlines to social interactions. Most topics stand separately on their own feet. The book ends with a compact presentation on the used game theoretical concepts as appendices.
Being a texbook in economics, however, does not excuse inaccurate and sometimes clearly misleading use of technical terms. I had serious problems understanding why "software" denotes in this book to all kind of digital content including music and movies. In my mind, the word software is restricted to computer programs and associated materials. Also, building models on some specific technology, Shy continuously leaps over the problem of defining its essential features, which should (or should not) be modeled. Taking definitions of technical terms as given (by Shy) can definitely confuse at least engineering students.
In overall, this book might be best characterized as an academic add-on to the well-known business book "Information Rules" by Carl Shapiro and Hal Varian. With some inaccurancies and perhaps some time-gap to real world applications, it makes a good textbook. Essential parts are timeless and presentation clear.
12 of 16 people found the following review helpful
Buy Gottinger's book instead 19 Aug. 2003
By A Customer - Published on Amazon.com
Format: Paperback
This is a very interesting book that covers the full range of network industries - and is in many ways a welcome addition to the literature.
However, I found the pitch of the book to be not quite right. In an attempt to satisfy a student market, the presentation is a little simplistic in places. Although there are IO courses everywhere, there are few solely devoted to network industries - so it is surprising that the publishers risked producing a paperback.
As a consumer, the price of Professor Shy's book is an appealing factor, but I found Hans Gottinger's far more up-to-date, rigorous and analytical book of the same title (Routledge, 2003) more stimulating.
Great high-level perspective of network effects 16 Jan. 2014
By ttang - Published on Amazon.com
Format: Paperback
I think this book is very clearly written and contains a lot of content in very little space. The models are basic and easy to understand, but that is entirely the point. It presents a great starting point for an undergraduate interested in this area, and even for graduate students who want to know the general landscape before delving into deeper, more technical papers. Like Fudenberg & Tirole's Industrial Organization (IO) text, the papers it draws from are mostly IO theory from the 1980's and 1990's, but their perspectives are still relevant today, especially in the digital economy.

Oz Shy is a clear and knowledgeable writer and almost all of his claims are grounded on common sense. I highly recommend this book.
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