Competitive Strategies of Product with Vertical Differentiation and Asymmetric Network Externality

Under incomplete coverage market,competitive strategies of Cournot or Bertrand of product with vertical differentiation and network externality are researched.According to the result,market profit and social welfare of product in Cournot competition are greater than those in Bertrand competition.In Bertrand competition or Cournot competition,when network externality low quality product is greater than that of high quality product and satisfies certain condition,low quality product obtains greater market profit.When network externality of high quality product is greater than that of low quality product,or less than that of low quality product and satisfies certain condition,or network externality is equal or is zero,high quality product obtains greater market profit.With network externality increasing,equilibrium point of Cournot-Nash which is not stable in multi-game,will eventually come close to Bertrand-Nash equilibrium point.