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Vaporware

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  • Stephan M. Levy

Abstract

This essay explores why firms would want to practice vaporware -- the issuance of intentionally false product announcements. In my model, a firm is able to release an upgraded version of its original product. However, consumers do not know the date at which the upgrade will first become available. A firm that is successful practicing vaporware steals market share from its competitor and earns greater profits than if consumers had perfect information. A firm that would release an upgrade at a relatively early date will issue only true announcements about the product's release. Firms that release upgrades at later dates will practice vaporware only if consumers believe they will make truthful announcements. Successful vaporware is equivalent to a firm cashing in on its reputation for making truthful product preannouncements.

Suggested Citation

  • Stephan M. Levy, 1995. "Vaporware," Industrial Organization 9512001, University Library of Munich, Germany, revised 29 Oct 1996.
    • Handle: RePEc:wpa:wuwpio:9512001
    Note: Type of Document - WP 6.1 ; prepared on IBM PC ; to print on HP; pages: 36 ; figures: included
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    References listed on IDEAS

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    • L00 - Industrial Organization - - General - - - General

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