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SPLINTERING AND INERTIA IN NETWORK INDUSTRIES *
Author(s) -
KRETSCHMER TOBIAS
Publication year - 2008
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/j.1467-6451.2008.00359.x
Subject(s) - early adopter , welfare , incentive , emerging technologies , business , inertia , industrial organization , aggregate (composite) , economics , microeconomics , computer science , marketing , market economy , physics , artificial intelligence , nanotechnology , materials science , classical mechanics
We analyse a stylised game of technology adoption with network effects and two 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 two technologies than with one. Turning to aggregate expected welfare, we find that two active technologies may be welfare‐improving.