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Network Externalities and Friendly Neighbors: When Firms Choose to Invite Competition

Dustin White & Ben O. Smith

American Economist2026https://doi.org/10.1177/05694345261427766article
ABDC C
Weight
0.50

What the paper says

Economic theory on the subject of barriers to entry focuses almost exclusively on firms seeking to preserve market power and economic profits. In this paper, we propose that, under certain circumstances, firms may instead choose to reduce barriers to entry as a profit-maximizing mechanism. We model this behavior and show that, under certain conditions, profit can increase for some existing firms as the number of firms in the industry increases. We provide evidence of this behavior from three distinct industries: personal computers, non-petroleum cars, and professional American football.

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Cite this paper

https://doi.org/https://doi.org/10.1177/05694345261427766

Or copy a formatted citation

@article{dustin2026,
  title        = {{Network Externalities and Friendly Neighbors: When Firms Choose to Invite Competition}},
  author       = {Dustin White & Ben O. Smith},
  journal      = {American Economist},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1177/05694345261427766},
}

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Network Externalities and Friendly Neighbors: When Firms Choose to Invite Competition

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.