Network Externality, Compatibility Choice, and Planned Obsolescence

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Network Externality, Compatibility Choice, and Planned Obsolescence

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Choi, Jay Pil

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Jay Pil Choi

Abstract

This paper attempts to provide a formal theory of planned obsolescence based on incompatible technologies in the presence of network externalities. The author explores how a monopolist's ability to make the new product incompatible with the old version of a product constrains the optimal dynamic behavior of the monopolist. The social optimum and the market equilibrium are compared. Finally, the possibility of quality distortion is considered as a commitment mechanism to the future compatibility choice. Copyright 1994 by Blackwell Publishing Ltd.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 42 (1994)
Issue (Month): 2 (June)
Pages: 167-82
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Handle: RePEc:bla:jindec:v:42:y:1994:i:2:p:167-82

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Related research
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Paper
- Choi, J.P., 1991. "Network Externality, Compatibility Choice, and Planned Obsolescence," Discussion Papers 1991_67, Columbia University, Department of Economics.

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Jong-Hee Hahn, 2001. "The Welfare Effect of Quality Degradation in the Presence of Network Externalities," Keele Department of Economics Discussion Papers (1995-2001) 2001/08, Department of Economics, Keele University, revised Feb 2003. [Downloadable!]
Other versions:
- Hahn, Jong-Hee, 2004. "The welfare effect of quality degradation in the presence of network externalities," Information Economics and Policy, Elsevier, vol. 16(4), pages 535-552, December. [Downloadable!] (restricted)
Yi-Nung Yang, 1996. "Network Effects, Pricing Strategies, and Optimal Upgrade Time in Software Provision," Industrial Organization 9602001, EconWPA. [Downloadable!]
Jay Pil Choi & Marcel Thum, 1997. "Market Structure and the Timing of Technology Adoption with Network Externalities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Other versions:
- Choi, J.P., 1996. "Market Structure and the Timing of Technology Adoption with Network Externalities," Discussion Papers 1996_06, Columbia University, Department of Economics.
- Choi, Jay Pil & Thum, Marcel, 1998. "Market structure and the timing of technology adoption with network externalities," European Economic Review, Elsevier, vol. 42(2), pages 225-244, February. [Downloadable!] (restricted)
Michael Waldman, 2004. "Antitrust Perspectives for Durable-Goods Markets," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Stephan M. Levy, 1995. "Vaporware," Industrial Organization 9512001, EconWPA, revised 13 Dec 1995. [Downloadable!]
Tobias Langenberg, 2009. "Product Durability in Markets with Consumer Lock-in," Discussion Papers 279, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
Juan Ruiz, 2003. "Another Perspective on Planned obsolescence: is there really too much Innovation?," Industrial Organization 0302001, EconWPA. [Downloadable!]
Jong-Hee Hahn, 2002. "Damaged Durable Goods," Industrial Organization 0211010, EconWPA. [Downloadable!]
Drew Fudenberg & Jean Tirole, 1997. "Upgrades, Trade-Ins and BuyBacks," Harvard Institute of Economic Research Working Papers 1803, Harvard - Institute of Economic Research. [Downloadable!]
Other versions:
- Drew Fudenberg & Jean Tirole, 1998. "Upgrades, Tradeins, and Buybacks," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 235-258, Summer. [Downloadable!] (restricted)
Edward Kutsoati & Jan Zabojnik, 2001. "Durable Goods Monopoly, Learning-by-doing and "Sleeping Patents"," Discussion Papers Series, Department of Economics, Tufts University 0105, Department of Economics, Tufts University. [Downloadable!]
Jong-Hee Hahn, 2002. "Damaged Durable Goods," Keele Economics Research Papers KERP 2002/21, Centre for Economic Research, Keele University. [Downloadable!]
Other versions:
- Jong-Hee Hahn, 2006. "Damaged Durable Goods," RAND Journal of Economics, The RAND Corporation, vol. 37(1), pages 121-133, Spring.
Calvano, Emilio, 2006. "Destructive Creation," Working Paper Series in Economics and Finance 653, Stockholm School of Economics, revised 18 Jul 2007. [Downloadable!]
Keshab Bhattarai & John Whalley, 1998. "The Division and Size of Gains from Liberalization of Service Networks," NBER Working Papers 6712, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Bhattarai, Keshab & John Whalley, 1998. "The Division and Size of Gains from Liberalization in Service Networks," CSGR Working papers series 03/98, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
- Keshab Bhattarai & John Whalley, 2006. "The Division and Size of Gains from Liberalization in Service Networks," Review of International Economics, Blackwell Publishing, vol. 14(3), pages 348-361, 08. [Downloadable!] (restricted)
Dennis W. Carlton & Michael Waldman, 1998. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," NBER Working Papers 6831, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Dennis W. Carlton & Michael Waldman, 1998. "The Strategic Use Of Tying To Preserve And Create Market Power In Evolving Industries," University of Chicago - George G. Stigler Center for Study of Economy and State 145, Chicago - Center for Study of Economy and State. [Downloadable!]
- Dennis W. Carlton & Michael Waldman, 2002. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 194-220, Summer.
Jong-Hee Hahn, 2000. "Functional Quality Degradation of Software with Network Externalities," Keele Department of Economics Discussion Papers (1995-2001) 2000/12, Department of Economics, Keele University, revised Jan 2001. [Downloadable!]
Margo Bergman, 2003. "When a Fad Ends: An Agent-Based Model of Imitative Behavior," Computing in Economics and Finance 2003 271, Society for Computational Economics. [Downloadable!]
Roland Strausz, . "Planned Obsolescence and the Provision of Unobservable Quality," Papers 028, Departmental Working Papers. [Downloadable!]
A. Banerji & Bhaskar Dutta, 2008. "Local network externalities and market segmentation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-13, Indian Statistical Institute, New Delhi, India. [Downloadable!]
Other versions:
- Banerji, A & Dutta, Bhaskar, 2005. "Local Network Externalities and Market Segmentation," The Warwick Economics Research Paper Series (TWERPS) 725, University of Warwick, Department of Economics. [Downloadable!]
- Banerji, A. & Dutta, Bhaskar, 2009. "Local network externalities and market segmentation," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 605-614, September. [Downloadable!] (restricted)

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