Notes by Yi-Nung
這篇是最早有關 network externalities 的論文之一
excess inertia :
new technology is not adopted but is efficient
excess momentum (called insufficient friction by Katz and Shapiro, 1992):
new technology is adopted but is inefficient
Katz and Shapiro (1985) present an oligopoly model to show that there is a tendency to too little standardization. However, this is because failure to standardize has no social benefits without specifying explicit cost to standardization in their model (Farrell and Saloner, 1986b, EL).
- Sujoy Chakravarty (2003) “Experimental Evidence on Product Adoption in the Presence of Network Externalities." Review of Industrial Organization, Volume 23, Numbers 3-4, 233-254. DOI: 10.1023/B:REIO.0000031367.79009.9b.
- Andrea Pontiggia, Francesco Virili (2010) “Network effects in technology acceptance: Laboratory experimental evidence." International Journal of Information Management, Volume 30, Issue 1, February 2010, Pages 68–77. http://dx.doi.org/10.1016/j.ijinfomgt.2009.07.001; unicas.it 提供的 [PDF]
- Mathias Drehmann, Jörg Oechssler, and Andreas Roider “Herding with and without payoff externalities — an internet experiment." International Journal of Industrial Organization, Volume 25, Issue 2, April 2007, Pages 391-415. DOI.
- Keser, Claudia, Suleymanova, Irina, and Wey, Christian (2011) “Technology adoption in markets with network effects: Theory and experimental evidence." DICE discussion paper No. 33, Germany. link to PDF
- Vincent Mak and Rami Zwick (2010) “Investment decisions and coordination problems in a market with network externalities: An experimental study. " Journal of Economic Behavior & Organization, Volume 76, Issue 3, December 2010, Pages 759–773. ucr.edu 提供的 [PDF]
There are often benefits to consumers and to firms from standardization of a product. We examine whether these standardization benefits can “trap" an industry in an obsolete or inferior standard when there is a better alternative available. With complete information and identical preferences among firms the answer is no; but when information is incomplete this “excess inertia" can occur. We also discuss the extent to which the problem can be overcome by communication.
Nicholas Economides (1996) “The economics of networks,"International Journal of Industrial Organization, Volume 14, Issue 6, October 1996, Pages 673–699.
Farrell and Saloner (1985) discuss a two-period model where consumers have varying willingness to pay for the change of the technology, measured by theta. Users can switch in period 1 or 2, and switching is irreversible. Users fall in four categories according to the strategy they pick: (i) they never switch, whatever the behavior of others in the first period; (ii) they switch in period 2 if other users have switched in period 1 — jumping on the bandwagon; (iii) they switch in period 1; (iv) switch in period 2 even if others have not switched in period 1. The last strategy is dominated by strategy (iii). Consumers of low theta use strategy (i), consumers of intermediate theta use strategy (ii), and consumers of high theta use strategy (iii). Consumers would like to coordinate themselves and switch in the first period (thereby getting the bandwagon rolling) but are unable to do so, thus creating excess inertia.34 This inertia can be reduced 34 See Katz and Shapiro (1992) for a different view arguing for excess momentum (which they call insufficient friction).