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Strategic Maneuvering and Standardization: Critical Advantage or Critical Mass?

  • Sangin Park
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    It is widely speculated that the adoption of a technology takes off to be self-sustaining if it reaches the critical mass. However, the sponsors of competing technologies may engage in strategic maneuvering in the adoption process. Indeed, this paper shows that in the de facto standardization process of the U.S. home VCR market, there was strategic maneuvering by the Betamax sponsor, which created only temporary interruptions. The counterfactual simulations, however, indicate that there is no irreversible critical mass and the sponsor of Betamax could reverse the tipping process if it had a critical strategic advantage which is determined by the difference in installed bases and other factors of consumer expectations for future adoption rates

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    Paper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 596.

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    Date of creation: 11 Aug 2004
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    Handle: RePEc:ecm:feam04:596
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    8. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
    9. Liebowitz, S J & Margolis, Stephen E, 1990. "The Fable of the Keys," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 1-25, April.
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