Simulation of the Diffusion of Network Effect Goods


The diffusion of communication standards such as traditional EDI standards, but also newer ones such as InternetEDI, WebEDI, or even XML-based data communication standards is lagging behind the expected degree of widespread use although the benefits accompanying with these standards were never in doubt. It is not only SMEs who have not completely adopted these standards, but also even large enterprises with massive communication traffic are often reluctant to adopt, and therefore do not use all possible electronic data communication standards. EDI standards and communication standards in general seem to be special and different from other products or goods that can be used without the necessity of being a product that is widely adopted among other market participants. Therefore, the diffusion of such network effect standards is difficult to predict and often remains below the expected degree of diffusion. Standards which are not able to overcome the early phase of diffusion (from the start-up until reaching critical mass or threshold) will never become accepted market standards. Apart from the diffusion of open, unsponsored EDI standards among firms this phenomenon is also observable for proprietary, sponsored standards in the telecommunication markets, such as for WAP, i-mode, or UMTS.


Network Effect Communication Standard Adoption Decision Electronic Data Interchange Install Base 
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© Deutscher Universitäts-Verlag | GWV Fachverlage GmbH, Wiesbaden 2006

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