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Econ 483_Lecture 15_Indirect networks - Indirect networks...

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Indirect networks Open standards Cases High-tech industry E Lecture 15: Indirect networks Econ 483: Economics of Innovation & Technology Evangelia Chalioti University of Illinois at Urbana-Champaign March 6, 2013 Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Indirect networks Open standards Cases High-tech industry E Outline of lecture Indirect networks Open standards High-tech industry Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Indirect networks Open standards Cases High-tech industry E Network e/ects There are two types of network bene°ts: Direct: When users of the network care about the number of the users directly (e.g. multiplayer games online) Indirect: When users know that if the network size increases, then the good±s quality is likely to be improved (more development of applications) XBOX vs. Wii vs. Playstation: closed interfaces Apple Mac: closed IBM PC: open VHS vs. Betamax Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Indirect networks Open standards Cases High-tech industry E Indirect networks Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Indirect networks Open standards Cases High-tech industry E Indirect network e/ects Stylization: There are a "platform" - e.g. a game console, an operating system applications which can only be used on that platform - e.g. games, text editing software an interface that makes the applications compatible with the platform Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Indirect networks Open standards Cases High-tech industry E Indirect network e/ects Market structure may depend on whether applications are compatible with multiple platforms or just one. Applications developers want to write for popular platforms. Consumers want to buy platforms that give access to many applications ! Popularity feeds on itself. Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Indirect networks Open standards Cases High-tech industry E Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved. ,. ,. ,.
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Indirect networks Open standards Cases High-tech industry E Indirect network e/ects - Can proprietary standards tip a market to monopoly? - Do platform owners have incentives to increase the number of applications or change its price? - Can an initial advantage in applications feed on itself to drive the other °rm out of the market? Lecture 15: Indirect networks, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c ° All rights reserved.
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