Journal article
Facilitating Adoption of Services with Positive Externalities via Subsidies
Performance evaluation review, v 42(3), pp 16-19
08 Dec 2014
Abstract
The paper investigates adoption of network services whose value incorporates three key features, namely, heterogeneity in user service afinity, a positive externality, and a cost. Positive externalities often result in a \chicken and egg" problem where early adopters can see a cost that exceeds the service's (low) initial value. In this paper we study sub- sidies as a means to \reach the knee" and push adoption higher (from zero to one). We focus on the simplest of sub-sidies, namely, a fixed subsidy over a given period of time, and are able to obtain expressions for quantities of natural interest, e.g., the minimum subsidy required, the minimum subsidy duration, and the total subsidy cost. Interestingly, the expressions reveal conditions under which the optimal subsidy is neither the lowest nor applied for the shortest duration. The findings help develop guidelines for effective subsidies to promote the adoption of network services.
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1 citations in Scopus
Details
- Title
- Facilitating Adoption of Services with Positive Externalities via Subsidies
- Creators
- Steven Weber - Drexel UniversityRoch Guérin - Washington University in St. Louis
- Publication Details
- Performance evaluation review, v 42(3), pp 16-19
- Publisher
- Association for Computing Machinery
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Electrical and Computer Engineering
- Scopus ID
- 2-s2.0-84920717662
- Other Identifier
- 991019173660704721