The Installed Base Effect: Some Empirical Evidence From The Microcomputer Market
AbstractThe penetration rate US network technologies is not only determined by the indigenous qualities of these technologies, but also by the adoption behaviour of other actors using the same network technology. This paper provides empirical evidence for the importance of network externalities and suggests that the econonmic consequences of network externalities - as they affect the diffusion speed of network technologies at an aggregate level - may be considerable.When the market offers incompatible network technologies, the relative share of previous adopters of the technologies plays a critical role in determining the diffusion speed of network technologies. This paper provides empirical evidence from the European microcomputer market between 1985 and 1994 which supports this hypothesis. Our analysis suggests that the diffusion speed of microcomputers at an aggregate level has varied with the relative order of magnitude of the network size of the two incompatible operating systems: a higher variation between the number of users of different microcomputers sold is positively relaled to a higher diffusion speed of microcomputers in general.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.
Volume (Year): 8 (1999)
Issue (Month): 4 ()
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Find related papers by JEL classification:
- Com - Mathematical and Quantitative Methods - - - - -
- JEL - Labor and Demographic Economics - - - - -
- Cla - Mathematical and Quantitative Methods - - - - -
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
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