Market Structure and the Timing of Technology Adoption with Network Externalities

Jay Choi and Marcel Thum

No 130, CESifo Working Paper Series from CESifo

Abstract: The paper shows that in the presence of network externalities, consumers adopt conventional technologies too early; the waiting option for a newly emerging technology is not exercised enough. This problem is aggravated when the new technology is provided by a single producer with market power because any positive value created via waiting by current consumers will be ex post appropriated by the monopolist. Therefore, the monopolist´s power to extract surplus operates against his own interests in this dynamic setting. The paper also shows how the producer of a new technology can partially overcome the problem of too little waiting by using licensing as a commitment device.

Keywords: network externalities; standardization; licensing (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Market structure and the timing of technology adoption with network externalities (1998)
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