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The DVD vs. DIVX Standard War: Network Effects and Empirical Evidence of Vaporware

Author

Listed:
  • Dranove, D.
  • Gandal, N.

Abstract

In most cases, the premature announcement of a future product cannot be anti-competitive. When there are network effects, however, firms may have incentives to strategically prenannounce products; such preannouncements are often referred to as "vaporware." Anticompetitive vaporware allegations have been leveled at IBM and Microsoft. Despite the antitrust concern about vaporware, there is no empirical work on the issue. In this paper, we empirically test for network effects and vaporware effects in the DVD market. We find that there are network effects in the DVD market and that the preannouncement by DIVX indeed slowed down the adoption of DVD technology.

Suggested Citation

  • Dranove, D. & Gandal, N., 1999. "The DVD vs. DIVX Standard War: Network Effects and Empirical Evidence of Vaporware," Papers 14-99, Tel Aviv.
    • Handle: RePEc:fth:teavfo:14-99
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    Citations

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    Cited by:

    1. Liran Einav & S. Ravid, 2009. "Stock market response to changes in movies’ opening dates," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 33(4), pages 311-319, November.
    2. Timothy F Bresnahan, 2004. "Network Effects in the Microsoft Case," Levine's Working Paper Archive 228400000000000008, David K. Levine.
    3. Jansen, J.A., 2000. "Essays on incentives in regulation and innovation," Other publications TiSEM 57604500-a5d0-4cd1-b00d-f, Tilburg University, School of Economics and Management.

    More about this item

    Keywords

    NETWORK ANALYSIS ; ADVERTISING ; MANAGEMENT ; INDUSTRIAL PROMOTION;
    All these keywords.

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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