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Competing Networks and Proprietary Standards: The Case of Quadraphonic Sound

  • Postrel, Steven R
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    Quadraphonic audio systems failed to replace stereo in the 1970s despite backing from all the major manufacturers and recording houses. Network externalities played a significant role in this episode, and the author uses the installed-base model of J. Farrell and G. Saloner (1986) to explain quad's failure. The author finds that the introduction of competing incompatible quadraphonic systems hindered the development of a viable user base, and he argues that the systems' sponsors introduced their products in a technologically premature state in order to prevent one another from preemptively establishing the quad standard. As a result, self-fulfilling consumer and retailer expectations doomed quadraphonic sound. Copyright 1990 by Blackwell Publishing Ltd.

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    Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

    Volume (Year): 39 (1990)
    Issue (Month): 2 (December)
    Pages: 169-85

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    Handle: RePEc:bla:jindec:v:39:y:1990:i:2:p:169-85
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