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

Roberto Fontana () and Lorenzo Zirulia

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

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 when it opens. Mergers and acquisitions also play an important role as the new market is pioneered by a new start-up, which is soon acquired by the dominant incumbent. As a result of the acquisition, the acquiring firm becomes leader also in the new market.

JEL-codes: L10 L63 O30 (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-his
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