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The DVD Versus DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects

  • Dranove, David
  • Gandal, Neil

In this Paper, we empirically test for network effects and preannouncement effects in the DVD market. We do this by measuring the effect of potential (incompatible) competition on a network undergoing growth. We find that there are network effects. The data is generally consistent with the hypothesis that the preannouncement of DIVX temporarily slowed down the adoption of DVD technology.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3634.

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Date of creation: Nov 2002
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Handle: RePEc:cpr:ceprdp:3634
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  1. Neil Gandal & Shane Greenstein & David Salant, 1995. "Adoptions and Orphans in the Early Microcomputer Market," Industrial Organization 9502002, EconWPA.
  2. Erik Brynjolfsson & Chris F. Kemerer, 1996. "Network Externalities in Microcomputer Software: An Econometric Analysis of the Spreadsheet Market," Management Science, INFORMS, vol. 42(12), pages 1627-1647, December.
  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.
  4. Katz, Michael L & Shapiro, Carl, 1992. "Product Introduction with Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 55-83, March.
  5. Dranove, David & Gandal, Neil, 2000. "The DVD vs. DIVX Standard War: Empirical Evidence of Vaporware," Competition Policy Center, Working Paper Series qt4961n0hj, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  6. Chou, Chien-fu & Shy, Oz, 1990. "Network effects without network externalities," International Journal of Industrial Organization, Elsevier, vol. 8(2), pages 259-270, June.
  7. Farrell, Joseph & Saloner, Garth, 1986. "Standardization and variety," Economics Letters, Elsevier, vol. 20(1), pages 71-74.
  8. Church, Jeffrey & Gandal, Neil, 1992. "Network Effects, Software Provision, and Standardization," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 85-103, March.
  9. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
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