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Differentiation Across Standards and Adoption Failure in 56K Modems

56K modems were introduced under two competing incompatible standards. We show the importance of competition between Internet Service Providers in the adoption process. We show that ISP’s were less likely to adopt the technology that more competitors adopted. This result is particularly striking given that industry participants expected coordination on one standard or the other. We speculate about the role of ISP differentiation in preventing the market from achieving standardization until a government organization intervened.

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Paper provided by NET Institute in its series Working Papers with number 03-12.

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Length: 42 pages
Date of creation: Dec 2003
Date of revision: Dec 2003
Handle: RePEc:net:wpaper:0312
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  1. Philip A. Haile & Ali Hortacsu & Grigory Kosenok, 2004. "On the Empirical Content of Quantal Response Equilibrium," Yale School of Management Working Papers ysm421, Yale School of Management.
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  9. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
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  11. James G. Mulligan & Emmanuel Llinares, 2003. "Market Segmentation and the Diffusion of Quality-Enhancing Innovations: The Case of Downhill Skiing," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 493-501, August.
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  14. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
  15. Postrel, Steven R, 1990. "Competing Networks and Proprietary Standards: The Case of Quadraphonic Sound," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 169-85, December.
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  19. David Genesove, 1999. "The Adoption of Offset Presses in the Daily Newspaper Industry in the United States," NBER Working Papers 7076, National Bureau of Economic Research, Inc.
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