IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/50623.html
   My bibliography  Save this paper

Network Industries in the New Economy

Author

Listed:
  • John, McGee
  • Tanya, Sammut-Bonnici

Abstract

In this paper we discuss two propositions: the supply and demand of knowledge, and network externalities. We outline the characteristics that distinguish knowledge-intensive industries from the general run of manufacturing and service businesses. Knowledge intensity and knowledge specialisation has developed as markets and globalisation have grown, leading to progressive incentives to outsource and for industries to deconstruct. The outcome has been a mixture of more intensive competition laced with points and periods of high differentiation. The paper looks at what is potentially the most powerful economic mechanism: positive feedback, alternatively known as demand-side increasing returns, network effects, or network externalities. This section provides the basis for alternative demand curves that incorporate positive feedback and derives their potential economic and strategic consequences. We argue that the propositions of knowledge supply and demand, and the dynamics of network externalities create new situations for our traditional industrial economy such that new types of economies of scale are emerging and ‘winner takes all’ strategies are having more influence. Our second paper takes the argument further and looks at the nature of firms’ strategies in the new world arguing that attention to technology standards, technical platforms, consumer networks, and supply chain strategies have created a significant contribution to strategy models within the new economy.

Suggested Citation

  • John, McGee & Tanya, Sammut-Bonnici, 2002. "Network Industries in the New Economy," MPRA Paper 50623, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50623
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/50623/1/MPRA_paper_50623.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    2. Nicholas Economides & Fredrick Flyer, 1997. "Compatibility and Market Structure for Network Goods," Working Papers 98-02, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    4. B. Dumont, 2000. "Carl Shapiro and Hal R. Varian, information rules: a strategic guide to the network economy," Competition and Regulation in Network Industries, Intersentia, vol. 1(1), pages 101-108, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sammut-Bonnici, Tanya, 2010. "Network Strategy in the Digital Economy," MPRA Paper 50620, University Library of Munich, Germany.
    2. Beomjin Choi & T. S. Raghu & Ajay Vinzé & Kevin J. Dooley, 2019. "Effectiveness of standards consortia: Social network perspectives," Information Systems Frontiers, Springer, vol. 21(2), pages 405-416, April.
    3. Javier Carrillo-Hermosilla & Pablo Chafla, 2005. "IE WP 01/03 Technology transfer and sustainable development in emerging economies," Others 0509002, University Library of Munich, Germany.
    4. Alessia Berni & Mariavittoria Cicellin & Stefano Consiglio & Luigi Moschera, 2012. "The evolution of the Italian Temporary Work Agency field: A path dependence perspective," Discussion Papers 10_2012, CRISEI, University of Naples "Parthenope", Italy.
    5. Slowak, André P., 2009. "Market fields structure & dynamics in industrial automation," FZID Discussion Papers 02-2009, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    6. Dietrich, Antje-Mareike, 2016. "Governmental platform intermediation to promote alternative fuel vehicles," Economics Department Working Paper Series 16, Technische Universität Braunschweig, Economics Department.
    7. Giovanna Devetag & Enrico Zaninotto, 2001. "The imperfect hiding: Some introductory concepts and preliminary issues on modularity," ROCK Working Papers 010, Department of Computer and Management Sciences, University of Trento, Italy, revised 13 Jun 2008.
    8. Jullien, Bruno, 2001. "Competing with Network Externalities and Price Discrimination," CEPR Discussion Papers 2883, C.E.P.R. Discussion Papers.
    9. Vialle, Pierre & Song, Junjie & Zhang, Jian, 2012. "Competing with dominant global standards in a catching-up context. The case of mobile standards in China," Telecommunications Policy, Elsevier, vol. 36(10), pages 832-846.
    10. Paul W.J. de Bijl & Sanjeev Goyal, 2002. "Market Integration and Technological Change," Netnomics, Springer, vol. 4(1), pages 19-37, March.
    11. Jean-Michel Dalle, 1995. "Dynamiques d'adoption, coordination et diversité : la diffusion des standards technologiques," Revue Économique, Programme National Persée, vol. 46(4), pages 1081-1098.
    12. Robin Cowan & William Cowan & G.M. Peter Swann, 2004. "Waves in consumption with interdependence among consumers," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(1), pages 149-177, February.
    13. Corrado Benassi & Marcella Scrimitore, 2017. "Income Distribution in Network Markets," Journal of Industry, Competition and Trade, Springer, vol. 17(3), pages 251-271, September.
    14. den Hartigh, E. & Langerak, F. & Commandeur, H.R., 2002. "The Effects of Self-Reinforcing Mechanisms on Firm Performance," ERIM Report Series Research in Management ERS-2002-46-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    15. Lange Rense & Oliva Terence A. & McDade Sean R., 2000. "An Algorithm for Estimating Multivariate Catastrophe Models: GEMCAT II," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 4(3), pages 1-34, October.
    16. Kogut, Bruce & Walker, Gordon & Kim, Dong-Jae, 1995. "Cooperation and entry induction as an extension of technological rivalry," Research Policy, Elsevier, vol. 24(1), pages 77-95, January.
    17. Netsanet Haile & Jörn Altmann, 2016. "Structural analysis of value creation in software service platforms," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(2), pages 129-142, May.
    18. Song, Yang & Berger, Ron & Yosipof, Abraham & Barnes, Bradley R., 2019. "Mining and investigating the factors influencing crowdfunding success," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    19. Ian Macinnes, 1994. "A Model For Standard Setting: High Definition Television," Contemporary Economic Policy, Western Economic Association International, vol. 12(4), pages 67-78, October.
    20. Hess, Mike & Ricart, Joan E., 2002. "Managing customer switching costs: A framework for competing in the networked environment," IESE Research Papers D/472, IESE Business School.

    More about this item

    Keywords

    innovation; innovation diffusion; network effects; network externalities; standards;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:50623. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.