The naturalstate o f a market where netwo rk ef f

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Unformatted text preview: t than in co nventio nal, no nnetwo rk industries. First, netwo rk markets experience early, fierce co mpetitio n. The po sitive-f eedback lo o p inherent in netwo rk ef f ects—where the biggest netwo rks beco me even bigger—causes this. Firms are very aggressive in the early stages o f these industries because o nce a leader beco mes clear, bandw ago ns f o rm, and new ado pters begin to o verwhelmingly f avo r the leading pro duct o ver rivals, tipping the market in f avo r o f o ne do minant f irm o r standard. This tipping can be remarkably swif t. Once the majo rity o f majo r studio s and retailers began to back Blu-ray o ver HD DVD, the latter ef f o rt f o lded within weeks. These markets are also o f ten winner-take-all o r winner-take-mo st, exhibiting mo no po listic tendencies where o ne f irm do minates all rivals. Lo o k at all o f the examples listed so f ar—in nearly every case the do minant player has a market share well ahead o f all co mpetito rs. When, during the U.S. Micro so f t antitrust trial, Judge Tho mas...
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This document was uploaded on 01/31/2014.

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