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Vaporware as a Means of Entry Deterrence

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  • Marco A. Haan

Abstract

Firms in the computer industry are often accused of vaporware, the untruthful pre‐announcement of a new version of their product. By claiming they have a new product, critics argue, these firms try to deter potential entrants. The paper analyzes this phenomenon. It shows that vaporware is an equilibrium strategy in a signaling game in which the possibility to market a new product is private information. In this model, the possibility of vaporware can hurt consumers, also in the case the incumbent does have a new version of its product. The welfare effects of vaporware are ambiguous.

Suggested Citation

  • Marco A. Haan, 2003. "Vaporware as a Means of Entry Deterrence," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 345-358, September.
    • Handle: RePEc:bla:jindec:v:51:y:2003:i:3:p:345-358
    DOI: 10.1111/1467-6451.00204
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    Cited by:

    1. Arai Koki, 2024. "Law and Economics of Language Model Development: Empirical Examination of Corporate Strategies and Vaporware Claims," Asian Journal of Law and Economics, De Gruyter, vol. 15(1), pages 31-53, April.
    2. Jos Jansen, 2005. "The Effects of Disclosure Regulation of an Innovative Firm," CESifo Working Paper Series 1459, CESifo.
    3. Choi, Jay Pil & Kristiansen, Eirik Gaard & Nahm, Jae, 2019. "Strategic Product Pre-announcements in Markets with Network Effects," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 60(1), pages 1-20, June.
    4. Heli Koski & Tobias Kretschmer, 2004. "Survey on Competing in Network Industries: Firm Strategies, Market Outcomes, and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 5-31, March.
    5. Cave, Jonathan, 2009. "Prisoners of our own Device – an evolutionary perspective on lock-in, technology clusters and telecom regulation," MPRA Paper 83199, University Library of Munich, Germany.
    6. Ozge Turut & Elie Ofek, 2012. "Innovation Strategy and Entry Deterrence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 583-631, September.
    7. Lam, Wing Man Wynne, 2014. "Ex Ante and Ex Post Investments in Cybersecurity," TSE Working Papers 14-519, Toulouse School of Economics (TSE).
    8. Claussen, Jörg & Kretschmer, Tobias & Spengler, Thomas, 2010. "Market leadership through technology – Backward compatibility in the U.S. Handheld Video Game Industry," Discussion Papers in Business Administration 12716, University of Munich, Munich School of Management.
    9. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    10. Jong-Hee Hahn & Jin-Hyuk Kim, 2012. "Monopoly R&D and Compatibility Decisions in Network Industries," Working papers 2012rwp-43, Yonsei University, Yonsei Economics Research Institute.
    11. Michelle Y. Lu & Jiwoong Shin, 2018. "A Model of Two-Sided Costly Communication for Building New Product Category Demand," Marketing Science, INFORMS, vol. 37(3), pages 382-402, May.
    12. Claussen, Jörg & Kretschmer, Tobias & Spengler, Thomas, 2010. "Backward Compatibility to Sustain Market Dominance – Evidence from the US Handheld Video Game Industry," Discussion Papers in Business Administration 11499, University of Munich, Munich School of Management.
    13. Lam, Wing Man Wynne, 2016. "Attack-prevention and damage-control investments in cybersecurity," Information Economics and Policy, Elsevier, vol. 37(C), pages 42-51.
    14. Romeo Turcan, 2011. "Toward a theory of international new venture survivability," Journal of International Entrepreneurship, Springer, vol. 9(3), pages 213-232, September.
    15. Elie Ofek & Özge Turut, 2013. "Vaporware, Suddenware, and Trueware: New Product Preannouncements Under Market Uncertainty," Marketing Science, INFORMS, vol. 32(2), pages 342-355, March.
    16. Lam, W., 2015. "Attack-Deterring and Damage-Control Investments in Cybersecurity," LIDAM Discussion Papers CORE 2015023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. Kerstan, Sven & Kretschmer, Tobias & Muehlfeld, Katrin, 2012. "The dynamics of pre-market standardization," Information Economics and Policy, Elsevier, vol. 24(2), pages 105-119.

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