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Competition, Inertia, and Network Effects

Autoren/Herausgeber: Kretschmer, T.
Erschienen: 2005
Publikationsart: Working Papers
erschienen in: SSRN

Abstract

We analyze a simple game of technology adoption with network effects and multiple new technologies. Potential adopters can adopt early, late, or not at all. We show that one of the reasons for the failure of new technologies can be the presence of multiple incompatible variants of that technology. An adopter's individual incentives to adopt are lower with multiple technologies than with one. Turning to aggregate expected welfare, however, we find that two active technologies may be welfare-improving.

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