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Vaporware

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Author Info
Stephan M. Levy

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Abstract

This essay explores why firms would want to practice vaporware -- the issuance of intentionally false product announcements. In my model, a firm is able to release an upgraded version of its original product. However, consumers do not know the date at which the upgrade will first become available. A firm that is successful practicing vaporware steals market share from its competitor and earns greater profits than if consumers had perfect information. A firm that would release an upgrade at a relatively early date will issue only true announcements about the product's release. Firms that release upgrades at later dates will practice vaporware only if consumers believe they will make truthful announcements. Successful vaporware is equivalent to a firm cashing in on its reputation for making truthful product preannouncements.

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Publisher Info
Paper provided by EconWPA in its series Industrial Organization with number 9512001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 36 pages
Date of creation: 07 Dec 1995
Date of revision: 13 Dec 1995
Handle: RePEc:wpa:wuwpio:9512001

Note: Type of Document - WP 6.1 ; prepared on IBM PC ; to print on HP; pages: 36 ; figures: included
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Web page: http://129.3.20.41

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Related research
Keywords: Vaporware; preannouncements; upgrades; innovations;

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Find related papers by JEL classification:
L00 - Industrial Organization - - General - - - General

References listed on IDEAS
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  1. Choi, Jay Pil, 1994. "Network Externality, Compatibility Choice, and Planned Obsolescence," Journal of Industrial Economics, Blackwell Publishing, vol. 42(2), pages 167-82, June. [Downloadable!] (restricted)
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  2. Stein, Jeremy C, 1989. "Cheap Talk and the Fed: A Theory of Imprecise Policy Announcements," American Economic Review, American Economic Association, vol. 79(1), pages 32-42, March. [Downloadable!] (restricted)
  3. Joseph Farrell & Garth Saloner, 1985. "Installed Base and Compatibility With Implications for Product Preannouncements," Working papers 385, Massachusetts Institute of Technology (MIT), Department of Economics.
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  4. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November. [Downloadable!] (restricted)
  5. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-94, July. [Downloadable!] (restricted)
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