1994 Reports

Do Converters Facilitate the Transition to a New Technology?: A Dynamic Analysis of Coverters

Choi, Jay Pil

This paper analyzes the process of transition in standards between incompatible technologies when converters are available. Contrary to a common presumption that converters facilitate the transition from an old technology to an otherwise incompatible new technology, I find circumstances in which the possibility of transition is blockaded by the existence of converters. When there are changes in the adoption behavior due to the existence of converters, I also analyze the welfare consequences of the changes in the adoption regimes. In the welfare analysis of converters, a distinction is made between ex ante and ex post efficiency.