Empirically Testing for Indirect Network Externalities in the LCD Television Market
AbstractThis paper examines price data on over 222 LCD televisions to estimate indirect network effects arising from two sources. First, we conjecture that the disconnect between the timing of when broadcasters are required to convert to an only digital-signal world and when television manufacturers were required to have an ATSC digital tuner install on all new televisions has created an indirect network effect whereby television that are backward compatible with the analog QAM and VSB-8 systems have short-run value. Over time, however, we argue that the ATSC digital tuner will become more valuable. The second indirect network effect we estimate stems from the number and types of ports available on LCD televisions. In each case, we find statistically significant evidence for the presence of indirect network effects in the market for LCD televisions.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 08-40.
Length: 21 pages
Date of creation: Nov 2008
Date of revision: Nov 2008
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Web page: http://www.NETinst.org/
HDTV; Internet; Connectivity; Compatibility; Indirect Network Externalities;
Find related papers by JEL classification:
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-11 (All new papers)
- NEP-CUL-2008-11-11 (Cultural Economics)
- NEP-IND-2008-11-11 (Industrial Organization)
- NEP-NET-2008-11-11 (Network Economics)
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