Technology adoption in the presence of network externalities
Woodrow Wilson School, Princeton University, 1985 - Competition - 28 pages
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analysis Angus Deaton Avinash Dixit Carl Shapiro cheaper choose technology compatible products competing technologies consumer surplus consumers ignore consumers purchasing technology consumers will purchase consumption externalities cost differences Don Fullerton DURABLE GOODS MONOPOLIST dynamics Economics facto standardization Figure firm first-mover advantage first-period consumers compare first-period price Gene Grossman given gross consumption benefits Hence industry evolution intermediate benefits intertemporal network externalities investments Katz and Carl later consumers learning-by-doing marginal cost market equilibrium market outcome maximal Michael network effects Oligopoly Ordover penetration pricing period-two consumers personal computer Policy preferred technology Presence of Network Princeton University Princeton property rights purchase decisions QWERTY Rational Expectations return to scale reverse stranding second-best second-mover advantage second-period price second-period sales shaded region socially optimal pattern splitting sponsored technology technologies is sponsored Technology Adoption technology B wins technology choice unsponsored v(Nj v(Xj weakened-rival effect Welfare Willig wins the first-period within-period Woodrow Wilson School