Abstract: Researchers always omit horizontal co-operation relationships which are from supply chain angle among enterprises.We build a Strackelberg model and analyze the decision research of network oligopoly market industry chain with capacity restraint by comparing two different strategies of downstream enterp rises, network externality andprice discrimination also have been analyzed in the model.Some conclusions can be drawn:network externality plays an important part in optimal decision of enterprises which are in industry chain, but the sum effect is not sure because of many factors.The optimal production is equal in the downstream enterprises no matter what strategies they choose, enterprises will get much production when they choose competition strategy.Enterprises of upstream will get much more profit when they choose price discrimination.

Key words: industry chain, capacity restriction, price discrimination, Stackelberg model