“…then came Cisco, and the rest is history”: a ‘history friendly’ model of the Local Area Networking industry

Roberto Fontana and Lorenzo Zirulia

Journal of Evolutionary Economics, 2015, vol. 25, issue 5, 875-899

Abstract: We study the role that switching costs, compatibility, and mergers and acquisitions play in influencing the evolution of a multi-market industry. By looking at the case of the Local Area Networking industry, we propose a ‘history friendly model’ to replicate its evolution during the 1990s. Our model explains how a firm can start from a dominant position in one of the existing markets and exploit switching costs and compatibility to enter a new market. Mergers and acquisitions also play an important role as the new market is pioneered by a start-up, which is soon acquired by the dominant incumbent. As a result of the acquisition, the acquiring firm becomes the leader also in the new market. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Simulation; History friendly models; Switching costs; Compatibility; D22; G34; O30; L10; L63 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s00191-015-0422-8

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