Consider the model of network effects we analyzed in class (read the note on network effects in the course website, if you have not done yet). Let us assume that there are 100 people and they are indexed by v = 1, 2, ... 100. Otherwise, we consider exactly the same setting.
(a) Derive the demand curve and draw it.
(b) As in the note and we did in class, assume that the demand side is perfectly competitive with the production cost of the good is 900. What are the potential equilibria (i.e., how many consumers will buy in each equilibrium)? Identify which equilibrium is stable or unstable. (c) Suppose that you are a policy-maker and you believe that it is important to have this product be successful in the market. You consider subsidizing a critical member of consumers to make sure that this product is successfully launched. What is the critical number of consumers?