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Title: |
Product Compatibility and Technological
Innovation |
| Author: |
Kim, Jeong-Yoo |
| Author
Affiliation: |
Dongguk U |
| Source: |
International Economic Journal, Autumn 2000, v. 14, no. 3, pp. 87-100 |
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Publication Date: |
Autumn 2000 |
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Abstract: |
This paper explores the relationship
between the firms' compatibility choice and quality improving
technological progress in a static model. I demonstrate that firms'
compatibility choice in anticipation of quality improving innovation
critically depends on how users' expectations regarding the network size
are formed. In particular, if users have rational expectations, the firm
with the small innovation will prefer full compatibility, whereas the
firm with the large innovation will prefer complete incompatibility, and
as a result, with the small innovation, excessive standardization may
occur. |
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