Dynamic monopoly pricing with network externalities

In this paper, we study the optimal dynamic monopoly pricing for a good which exhibits positive network externalities. When network externalities are of sufficient magnitude, we show that, contrary to the Cease theorem, (1) there is no time inconsistency problem; (2) subgame perfect equilibrium prices increase as time passes. From this point of view, positive network externalities allow the monopoly to commit itself credibly to increasing future prices.