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Empirically Testing for Indirect Network Externalities in the LCD Television Market

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Author Info

  • Patrick A. Scholten

    ()
    (Bentley University)

  • Jeffrey A. Livingston

    ()
    (Bentley University)

  • David Ortmeyer

    ()
    (Bentley University)

  • Wilson Wong

    ()
    (Bentley University)

Abstract

This 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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File URL: http://www.netinst.org/Scholten_Livingston_Ortmeyer_Wong_08-40.pdf
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Bibliographic Info

Paper provided by NET Institute in its series Working Papers with number 08-40.

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Length: 21 pages
Date of creation: Nov 2008
Date of revision: Nov 2008
Handle: RePEc:net:wpaper:0840

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Web page: http://www.NETinst.org/

Related research

Keywords: HDTV; Internet; Connectivity; Compatibility; Indirect Network Externalities;

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  1. Erik Brynjolfsson & Chris F. Kemerer, 1993. "Network Externalities in Microcomputer Software: An Econometric Analysis of the Spreadsheet Market," Working Paper Series 158, MIT Center for Coordination Science.
  2. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
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