This paper investigates how switching costs affect product compatibility and market dynamics in network industries. A … network industries can change the market outcome from compatible products to incompatible products. In the former, price …

services and effective congestion management. Both sides neglect network externalities - the value of broadband to each content … to internalize the network externality. This suggests an alternative approach - a minimum quality of service standard …

We study the strategic choice of compatibility between two initially incompatible network goods in a two-stage game … and the possibility of side payments. With incompatibility, entry deterrence occurs for sufficiently strong network … equilibrium unless side payments are allowed and the network externalities are sufficiently low. When both firms can build a one …

The majority of industrial organizations literature on network externalities looks at firm behavior under given market … characteristics. The present paper instead asks the question whether the presence of network externalities can change market … network operators and thereby gain a dominant position when network externalities are significant. The paper comes to the …

Under network effects, we analyze when a firm with the largest market share of installed-base customers prefers … incompatibility with smaller rivals that are themselves compatible. With incompatibility, consumers realize that intra-network … competition makes the rivals' network more aggressive than a single-firm network in adding customers. Consequently, under …