Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85623
Authors: 
Janssen, Maarten C.W.
Mendys, Ewa
Year of Publication: 
2000
Series/Report no.: 
Tinbergen Institute Discussion Paper 00-087/1
Abstract: 
In this paper we investigate whether markets with heterogeneous network externalities can belocked-in by old technologies even if superior technologies are available. Heterogeneous networkexternalities are present when some consumers care more about the size of the market share of agood than others. Interestingly, the answer depends on the quality difference between the old andthe new technology and on whether firms compete in prices. Without price competition, a partiallock-in occurs if (and only if) the quality difference is small. In the presence of price competition,lock-in in the traditional sense completely disappears, although the old technology may keepsome market share in some periods as the new technology is priced higher in equilibrium.
Subjects: 
technology adoption
network externalities
lock-in
price competition
JEL: 
L1
L13
D43
Document Type: 
Working Paper

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