SPLINTERING AND INERTIA IN NETWORK INDUSTRIES* |
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| Authors: | TOBIAS KRETSCHMER |
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| Institution: | Institute for Communication Economics, Munich School of Management, University of Munich, Schackstr. 4/III, 80539 Munich, Germany.e‐mail:t.kretschmer@lmu.de |
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| Abstract: | 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. |
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