| Author: | Kristiansen, E. |
| Title: | R&D in the presence of network externalities: timing and compatibility |
| Journal: | RAND Journal of Economics
1998 : AUTUMN, VOL. 29:3, p. 531-547 |
| Index terms: | R&D NETWORKS EXTERNALITIES |
| Language: | eng |
| Abstract: | Two rival firms decide on the timing of R&D and whether the new products should be compatible. The author shows that network externalities may induce the firms to introduce new incompatible technologies early, which is socially harmful as the R&D costs increase, and de facto standardization becomes less likely. Compared with the equilibrium outcome, both firms may gain by delaying the introduction of incompatible technologies. By agreeing on common standards before product introduction, entry is delayed and profit may increase. |
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