| The network economy is entering into our lives at breathtaking speed, altering fundamentally the society, the politics, the economy, the organizations, the technologies and our lives. All of these have been the focus of the attention and discussion. How to understand and analyze the network economy as an integral organic system, however, is a specially pressing issue and presents an array of challenges. This study contains the author's efforts developed in response to that directive. In this article, what the author attempts to do is: on the basis of current research on the network economy, using economic tools, to develop a explanatory framework of the new economy, to promote better understanding of the economic implications of the network economy, and to help to make more informed concept-and theory-grounded strategies and policies.The whole study is organized into seven chapters:Chapter One: Digital Products and Pricing Chapter one outlines the seven distinct features of digital products. On the basis of it, the economic implications of the digital products pricing are discussed.Chapter Two: Network Externalities and the Market Effect Chapter two explores the concept of network externalities, its causation as well as several factors that may affect the behavior of network externalities. Following these basic explanations, further economic analysis about network externalities is developed, Including the impact on the demand curve, the rule of diminishing returns, the scale economy, etc. The scope of study is broadened to the positive feedback process in the network economy in the next part of chapter two, which has aroused great interest and concern among economists. At last we summarize the characteristics of the network markets.Chapter Three: Pricing Strategies Our discussion in this chapter focuses on the pricing strategies of digital products. The discussion starts from the cost characteristics of digital products, which have significant implications for competitive pricing strategies. Then we emphasize the key factor of the pricing strategies ?product differentiation, pointing out it is the basis of differential pricing. In the general analysis of non-uniform price, we discuss the condition of price discrimination, its mechanism and the different types of price discrimination. At last we enter into the in-depth analysis of pricing process, including consumer arbitrage, two-part tariff, bundling and quality selection.Chapter Four: Managing Lock-in: This chapter explores strategies for managing lock-in, both from the perspective of buyers and suppliers. Building on the principles introduced in chapter two, we look more closely at switching cost, lock-in and installed-base. Armed with an improved understanding of these concepts, we turn to study managing strategies. The next portion is directed at buyers: we introduce some strategies which can help to prevent buyers from being locked in, while others that focus on minimizing the extent of lock-in if lock-in have happened. The remainder of the chapter delves deeplyinto competitive strategies for companies that sell their products and services in markets where customers face significant switching costs, including those used to build an installed base as well as those to maximize the value of the installed base.Chapter Five: Limiting Pricing and Standard Competition In the discussion of limiting pricing strategy, we analyze the cause of entrance barracks and the relevant strategies. In the discussion of standard war, we focus on the analysis of preemption, penetration pricing, expectations management as well as the decisions of compatibility and alliances. In fact, the standard strategies adopted by different types of market agents are not uniform. In practice, many markets are controlled by several major standards rather than single standard.Chapter Six: Internet Infrastructure and Public Policies In this chapter, we explore the cause of universal service, analyze its mechanism and major principles. At last the existing problems in...
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