Abstract
In market structures with network externalities, it is often asserted that there is a natural tendency toward standardization. In this paper it is argued that incompatible products may survive in static models. Like Katz and Shapiro [1985], I develop a simple multi-product oligopoly in which the demand for one of these commodities increases with the number of agents consuming this good. Instead I introduce a variety of cost functions and discuss the limitations of their results of Katz and Shapiro and exhibit an example that reverses their conclusions.
Comments by a number of colleagues and two anonymous referees have been extremely helpful. Research support from France Telecom is also gratefully acknowledged.
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Stahn, H. (2000). Does Standardization Really Increase Production?. In: The Economics and Econometrics of Innovation. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-3194-1_14
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DOI: https://doi.org/10.1007/978-1-4757-3194-1_14
Publisher Name: Springer, Boston, MA
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