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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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File URL: http://www.netinst.org/Rysman2.pdf
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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
Contact details of provider: Web page: http://www.NETinst.org/

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  1. Shy,Oz, 2001. "The Economics of Network Industries," Cambridge Books, Cambridge University Press, number 9780521800952, December.
  2. Gourieroux,Christian & Monfort,Alain, 1995. "Statistics and Econometric Models," Cambridge Books, Cambridge University Press, number 9780521405515, December.
  3. Gandal, Neil & Kirkwood MP, Archy & Rob, Rafael, 1999. "The Dynamics of Technological Adoption in Hardware/Software Systems: The Case of Compact Disc Players," CEPR Discussion Papers 2078, C.E.P.R. Discussion Papers.
  4. Philip A. Haile & Ali Hortacsu & Grigory Kosenok, 2006. "On the Empirical Content of Quantal Response Equilibrium," Working Papers w0076, Center for Economic and Financial Research (CEFIR).
  5. Gautam Gowrisankaran & Daniel A. Ackerberg, 2003. "Quantifying Equilibrium Network Externalities in the ACH Banking Industry," Working Papers 03-06, NET Institute, revised Sep 2003.
  6. 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.
  7. Gautam Gowrisankaran & Joanna Stavins, 2002. "Network Externalities and Technology Adoption: Lessons from Electronic Payments," NBER Working Papers 8943, National Bureau of Economic Research, Inc.
  8. 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.
  9. Augereau, Angelique & Greenstein, Shane, 2001. "The need for speed in emerging communications markets: upgrades to advanced technology at Internet Service Providers," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1085-1102, July.
  10. Gautam Gowrisankaran & Joanna Stavins, 2002. "Network externalities and technology adoption: lessons from electronic payments," Working Paper Series 2002-16, Federal Reserve Bank of San Francisco.
  11. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
  12. Steven Klepper, 2002. "Firm Survival and the Evolution of Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 37-61, Spring.
  13. Martin Pesendorfer & Philipp Schmidt-Dengler, 2003. "Identification and Estimation of Dynamic Games," NBER Working Papers 9726, National Bureau of Economic Research, Inc.
  14. 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.
  15. 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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