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The DVD Versus DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects

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Listed:
  • Gandal, Neil
  • Dranove, David

Abstract

In this Paper, we empirically test for network effects and preannouncement effects in the DVD market. We do this by measuring the effect of potential (incompatible) competition on a network undergoing growth. We find that there are network effects. The data is generally consistent with the hypothesis that the preannouncement of DIVX temporarily slowed down the adoption of DVD technology.

Suggested Citation

  • Gandal, Neil & Dranove, David, 2002. "The DVD Versus DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects," CEPR Discussion Papers 3634, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3634
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    References listed on IDEAS

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    1. Garth Saloner & Andrea Shepard, 1995. "Adoption of Technologies with Network Effects: An Empirical Examination of the Adoption of Teller Machines," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 479-501, Autumn.
    2. Chou, Chien-fu & Shy, Oz, 1990. "Network effects without network externalities," International Journal of Industrial Organization, Elsevier, vol. 8(2), pages 259-270, June.
    3. Dranove, David & Gandal, Neil, 2000. "The DVD vs. DIVX Standard War: Empirical Evidence of Vaporware," Competition Policy Center, Working Paper Series qt4961n0hj, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    4. Erik Brynjolfsson & Chris F. Kemerer, 1996. "Network Externalities in Microcomputer Software: An Econometric Analysis of the Spreadsheet Market," Management Science, INFORMS, vol. 42(12), pages 1627-1647, December.
    5. Neil Gandal, 1994. "Hedonic Price Indexes for Spreadsheets and an Empirical Test for Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 160-170, Spring.
    6. Neil Gandal & Shane Greenstein & David Salant, 1999. "Adoptions and Orphans in the Early Microcomputer Market," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 87-105, March.
    7. Neil Gandal & Michael Kende & Rafael Rob, 2000. "The Dynamics of Technological Adoption in Hardware/Software Systems: The Case of Compact Disc Players," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 43-61, Spring.
    8. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
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    10. Gandal, Neil, 1995. "Competing Compatibility Standards and Network Externalities in the PC Software Market," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 599-608, November.
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    13. Farrell, Joseph & Saloner, Garth, 1986. "Standardization and variety," Economics Letters, Elsevier, vol. 20(1), pages 71-74.
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    More about this item

    Keywords

    Product preannouncements; Standards; Network effects;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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