| This thesis investigates how a firm's incentives to publicly disclose privately-held information are affected by the presence of network effects. Network effects are common phenomena arising when the value a consumer derives from a product depends on the number of other users. Consumers in markets with network effects make product adoption decisions strategically in an effort to join a large network. The analysis demonstrates that disclosures in markets with network effects lead to important interactions between consumer purchasing and firm production decisions. These interactions, termed customer feedback loops, cause a firm to worry less about divulging trade secrets and more about conveying an advantage over its rival. As a consequence, network effects encourage the firm to publicly release information it would otherwise be reluctant to disclose. |
