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The Provision of (Two-Way) Converters in the Transition Process to a New Incompatible Technology

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  • Choi, Jay Pil

Abstract

This paper analyzes the dynamic provision of converters in the transition process between two incompatible technologies. The author derives the equilibrium behavior in the provision of converters and compares it to the socially optimal outcome. He finds that there can be two types of market inefficiency in the provision of converters. First, converters can be supplied by the 'wrong' group. Second, the timing of provision may be too late since the providers of converters ignore the positive externality that their provision would confer on the users of the rival technology. Copyright 1997 by Blackwell Publishing Ltd

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  • Choi, Jay Pil, 1997. "The Provision of (Two-Way) Converters in the Transition Process to a New Incompatible Technology," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 139-153, June.
  • Handle: RePEc:bla:jindec:v:45:y:1997:i:2:p:139-53
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    Cited by:

    1. Pollock, Rufus, 2005. "The Control of Porting in Two-Sided Markets," MPRA Paper 5023, University Library of Munich, Germany, revised Jun 2007.
    2. Jiawei Chen & Ulrich Doraszelski & Joseph E. Harrington, Jr., 2009. "Avoiding market dominance: product compatibility in markets with network effects," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 455-485.
    3. Matteucci, Nicola, 2013. "Standards, IPR and digital TV convergence: theories and empirical evidence," MPRA Paper 59359, University Library of Munich, Germany, revised Oct 2013.
    4. Mikhail Klimenko & Kamal Saggi, 2004. "Technical Compatibility and the Mode of Foreign Entry under Network Externalities," Working Papers 04-05, NET Institute, revised Oct 2004.
    5. Charles Z. Liu & Chris F. Kemerer & Michael D. Smith, 2007. "Standards Competition In The Presence Of Digital Conversion Technology: An Empirical Analysis Of The Flash Memory Card Market," Working Papers 07-17, NET Institute, revised Sep 2007.
    6. Filomena Garcia & Cecilia Vergari, 2016. "Revealing Incentives for Compatibility Provision in Vertically Differentiated Network Industries," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 720-749, September.

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