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

인터넷기업 간 전략적 제휴와 이윤배분: 네트워크 효과를 중심으로

  • 오정훈 (고려대학교 국제대학원)
  • Published : 2006.09.30

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

References

  1. 박한우, "한국 웹사이트들 사이의 하이퍼링크를 통한 제휴 네트워크 구조에 대한 탐사적 연구," 정보화정책, 제10권 제4호, 2003, pp. 36-52
  2. 오정훈, "커뮤니티 네트워크 형성게임," 경영정보학연구, 제11권 제3호, 2001, pp. 91-104
  3. 장세진, 인터넷 벤처기업들의 전략적 제휴에 대한 실증조사분석, 정보통신부, 2001
  4. Nalebuff, Barry J., Coopetition, 한국경제신문사 역, 1996
  5. Anand, B. and Khanna, T., "Do Firms Learn to Create Value? The Case of Alliances, Strategic Management Journal, Vol. 21, No. 3, 2000, pp. 295-315 https://doi.org/10.1002/(SICI)1097-0266(200003)21:3<295::AID-SMJ91>3.0.CO;2-O
  6. aake, P. and Boom, A., "Vertical Product Differentiation, Network Externality, and Compatibility Decisions," International Journal of Industrial Organization, Vol. 19, 2000, pp. 267-284 https://doi.org/10.1016/S0167-7187(99)00029-6
  7. Baum, J., Calabrese, T., and Silverman, B., "Dont Go It Alone: Alliance Network Composition and Startups' Performance in Canadian Biotechnology," Strategic Management Journal, Vol. 21, No. 3, 2000, pp. 267-294 https://doi.org/10.1002/(SICI)1097-0266(200003)21:3<267::AID-SMJ89>3.0.CO;2-8
  8. Bental, B. and Speigel, M., "Network Competition, Product Quality, and Market Coverage in the Presence of Network Externalities," The Journal of Industrial Economics, Vol. 43, 1995, pp. 197-208 https://doi.org/10.2307/2950481
  9. Dyer, J. and Singh, H., "The Relational View: Cooperative Strategies and Sources of Inter-organizational Competitive Advantage," Academy of Management Review, Vol. 23, No. 4, 1998, pp. 660-679 https://doi.org/10.2307/259056
  10. Dyer, J. and Nobeoka, K., "Creating and Managing a High-Performance Knowledge- Sharing Network: The Toyota Case," Strategic Management Journal, Vol. 21, No. 3, 2000, pp. 345-367 https://doi.org/10.1002/(SICI)1097-0266(200003)21:3<345::AID-SMJ96>3.0.CO;2-N
  11. Economides, N., "Desirability of Compatibility in the Absence of Network Externalities," The American Economic Review, Vol. 79, 1989, pp. 1165-1181
  12. Farrell, J. and Saloner, G., "Standardization, Compatibility, and Innovation," Rand Journal of Economics, Vol. 16, 1985, pp. 70-83 https://doi.org/10.2307/2555589
  13. Farrell, J. and Klemperer, P., "Coordination and Lock-In: Competition with Switching Costs and Netwrok Effects," mimeo, 2004
  14. Gallaugher, J. and Wang, Y., "Network Effect and the Impact of Free Goods: An Analysis of the Web Server Market," International Journal of Electronic Commerce, Vol. 3, No. 4, 1999, pp. 67-88 https://doi.org/10.1080/10864415.1999.11518349
  15. Gulati. R., "Social Structure and Alliance Formation Pattern: A Longitudinal Analysis," Administrative Science Quarterly, Vol. 40, 1995, pp. 619-642 https://doi.org/10.2307/2393756
  16. Gulati, R., Nohria, N., and Zaheer, A., "Guest Editor's Introduction to the Special Issue: Strategic Networks," Strategic Management Journal, Vol. 21, No. 3, 2000, pp. 199-201 https://doi.org/10.1002/(SICI)1097-0266(200003)21:3<199::AID-SMJ98>3.0.CO;2-0
  17. Hagel, J. and Armstrong, A.G., Net Gain, Harvard Business School Press, Boston MA, 1997
  18. Hamel, G., Doz, Y., and Prahalad, C., "Collaborate with Your Competitors and Win," Harvard Business Review, Vol. 67, No. 1, 1989, pp. 133-139
  19. Harrigan, K.R., Strategies for Joint Ventures, Lexington Books, lexington, MA, USA, 1985
  20. Jarillo, J.C., "On Strategic Networks," Strategic Management Journal, Vol. 9, No. 1, 1988, pp. 31-41 https://doi.org/10.1002/smj.4250090104
  21. Katz, M. and Shapiro, C., "Network Externalities, Competition, and Compatibility," A.E.R., Vol. 75, 1985, pp. 424-440
  22. Katz, M. and Shapiro, C., "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, Vol. 94, 1986, pp. 822-841
  23. Kogut, B., "Joint Ventures: Theoretical and Empirical Perspectives," Strategic Management Journal, Vol. 9 No. 4, 1988, pp. 319-332 https://doi.org/10.1002/smj.4250090403
  24. Liebowitz, S. and Margolis, S., "Network Effects," Handbook of Telecommunications, Vol. 1, North-Holland, 2003
  25. Mckinsey, "A Future for e-Alliances," Mckinsey Quarterly, No. 2, 2001
  26. PricewaterhouseCoopers, Technology Executive Connections Report, 2006.5.30
  27. Rowley, T., Behrens, D., and Krackhardt, D., "Redundant Governance Structures: An Analysis of Structural and Relational Embeddedness in the Steel and Semiconductor Industries, Strategic Management Journal, Vol. 21, No. 3, 2000, pp. 369-386 https://doi.org/10.1002/(SICI)1097-0266(200003)21:3<369::AID-SMJ93>3.0.CO;2-M
  28. Selten, R., "Re-examination of the Perfectness Concept for Equilibrium Points in Extensive Games," International Journal of Game Theory, Vol. 4, 1975, pp. 25-55 https://doi.org/10.1007/BF01766400