Home

Market Structure and the Timing of Technology Adoption with Network Externalities

Jay Pil Choi; Marcel Thum

Title:
Market Structure and the Timing of Technology Adoption with Network Externalities
Author(s):
Choi, Jay Pil
Thum, Marcel
Date:
Type:
Working papers
Department:
Economics
Permanent URL:
Series:
Department of Economics Discussion Papers
Part Number:
9596-07
Publisher:
Department of Economics, Columbia University
Publisher Location:
New York
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.
Subject(s):
Economics
Item views:
168
Metadata:
text | xml

In Partnership with the Center for Digital Research and Scholarship at Columbia University Libraries/Information Services | Terms of Use