“Lock-in” vs. “critical masses” — Industrial change under network externalities |
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Authors: | Ulrich Witt |
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Institution: | Max-Planck-Institute for Research into Economic Systems, Evolutionary Economics Unit, Kahlaische Str. 10, D-07745 Jena, Germany |
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Abstract: | Where increasing returns to adoption play a role in the diffusion of a new technology, technological “lock-in” is now often claimed to occur. However, this result, and the modeling approach that produces it, are problematic. Further innovations could never have a chance of disseminating, if “lock-in” had occurred in the diffusion process of earlier innovations. Yet, in reality, industrial change does not come to a halt. The paper offers a discussion of the apparent paradox. From an alternative modeling approach conditions are derived under which a newly introduced technology can successfully disseminate in the market despite existing network externalities. |
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Keywords: | Critical masses Lock-in Technological lock-in Technology adoption Industrial change Innovation Network externalities Increasing returns to adoption Diffusion processes Diffusion agent Competing technologies Standardization Path-dependence Polya-urn processes Master equation |
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