Download Economics of Standards in Information Networks by Tim Weitzel PDF

By Tim Weitzel

Standards play a renowned position in structures characterised through interplay. In info structures, criteria supply for compatibility and are a prerequisite for collaboration advantages. extra usually conversing, criteria represent networks. during this paintings, a standardization framework in response to an research of deficiencies of community impression idea and a online game theoretic community equilibrium research is built. basic determinants of diffusion strategies in networks (e.g. community topology, agent measurement, put in base) are pointed out and integrated right into a computer-based simulation version. for that reason, commonplace community behaviour (specific diffusion styles) will be defined and lots of findings from conventional community impression conception should be defined as certain situations of the version at specific parameter constellations (e.g. low cost, excessive density). in this foundation, resolution options for standardization difficulties are built, and a methodological course in the direction of a unified thought of networks is proposed.

"... an important contribution to the economics of standardization, and the implications make the publication a needs to for everybody operating within the field." (International magazine of IT criteria and Standardization Research)

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Extra resources for Economics of Standards in Information Networks

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In the early decisions, switching (or standardization) costs (transitional heterogeneity and the necessity to discharge bus and tram passengers on the street instead of the sidewalk) were considered to be higher than beneftts (cheaper cars (at least moderately) and a common standard with neighbors). Over time, increased intema- 25 tionalization of the car market and cross border traffic can be said to have finally tipped the decisions [Kindleberger 1983, 388-389]. 4 Excess inertia: The start-up problem The start-up problem prevents the adoption even of superior products; excess inertia can occur as no actor is willing to bear the disproportionate risk of being the first adopter ofa standard.

In a model in which two new (unsponsored) technologies compete he shows under what conditions network markets will eventually lock-in to a monopoly. As will become clear later, 20 Arthur's model is quite similar to the (user side) model developed in sections 3 and 4 in terms of the scenarios described. He argues that insignificant events in early diffusion periods might give small initial advantages to an (increasing returns) technology and that this technology might then be more improved as it is adopted more often.

An important issue for standard vendors is the consideration of markets that offer various standards that might contain compatible components so that users can compose their systems from different components. This phenomenon is called a mix and match market in network economics [Matutes/Regibeau 1988; Einhorn 1992]. Also, between vertically integrated markets there is the typical strategic vendor's question whether to provide components compatible with those of other fmns [EconomideslWhite 1993] thus deciding between competing within or between standards [BesenIFarrell 1994, 117-118].

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