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Vaporware as a Means of Entry Deterrence
Author(s) -
Haan Marco A.
Publication year - 2003
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00204
Subject(s) - deterrence (psychology) , computer security , criminology , computer science , psychology
Firms in the computer industry are often accused of vaporware, the untruthful pre‐announcement of a new version of their product. By claiming they have a new product, critics argue, these firms try to deter potential entrants. The paper analyzes this phenomenon. It shows that vaporware is an equilibrium strategy in a signaling game in which the possibility to market a new product is private information. In this model, the possibility of vaporware can hurt consumers, also in the case the incumbent does have a new version of its product. The welfare effects of vaporware are ambiguous.