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SPLINTERING AND INERTIA IN NETWORK INDUSTRIES -super-*

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  • TOBIAS KRETSCHMER

Abstract

We analyse a stylised game of technology adoption with network effects and two new technologies. Potential adopters can adopt early, late or not at all. We show that one of the reasons for the failure of new technologies can be the presence of multiple incompatible variants of that technology. An adopter's individual incentives to adopt are lower with two technologies than with one. Turning to aggregate expected welfare, we find that two active technologies may be welfare-improving. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.

Volume (Year): 56 (2008)
Issue (Month): 4 (December)
Pages: 685-706

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Handle: RePEc:bla:jindec:v:56:y:2008:i:4:p:685-706

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. Jörg Claussen & Tobias Kretschmer & Thomas Spengler, 2012. "Market Leadership Through Technology - Backward Compatibility in the U.S. Handheld Video Game Industry," CEP Discussion Papers dp1124, Centre for Economic Performance, LSE.
  2. 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.
  3. JP Eggers & Michal Grajek & Tobias Kretschmer, 2011. "Performance implications of core and complementary pre-entry experience: The role of consumer heterogeneity in mobile telephony," ESMT Research Working Papers ESMT-11-03 (R2), ESMT European School of Management and Technology, revised 29 May 2012.

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