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"The Dynamics of Technological Adoption in Hardware/Software Systems: The Case of Compact Disc Players''

  • Neil Gandal
  • Michael Kende
  • Rafael Rob

In this paper we exmine the dynamic resolution of technological adoption in "hardware/software" systems. We are interested in determinig to what extent software availability affects hardware sales and/or vice-versa. We fi rst develop a dynamic model for estimating demand when costs (and hence prices) are declining over time. When then estimate it empirically for the case of compact disc players.

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Paper provided by University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences in its series CARESS Working Papres with number 97-10.

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Handle: RePEc:wop:pennca:97-10
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  1. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
  2. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
  3. Church, Jeffrey & Gandal, Neil, 1992. "Network Effects, Software Provision, and Standardization," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 85-103, March.
  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. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
  6. M. Kandori & R. Rob, 2010. "Bandwagon Effects and Long Run Technology Choice," Levine's Working Paper Archive 501, David K. Levine.
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