Econ 483_Lecture 15_Indirect networks

A rival cannot enter without a menu of comparable

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Unformatted text preview: thout a menu of comparable applications. Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Indirect networks Open standards Cases High-tech industry E Indirect network e¤ects Suppose: 2 platform owners sell systems with incompatible software. ) The …rm with more applications has a stronger incentive to increase them still more until the other platform drops out of the market. The market outcome depends on whether: the platforms & applications are both proprietary; licence may be needed applications can be cross-platform compatible when standards are open Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Indirect networks Open standards Cases High-tech industry E Open standards An open standard might be the best of all possible worlds. Advantages: With open interfaces, applications & platforms are priced & sold separately. Applications need not...
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