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INDIRECT NETWORK EFFECTS AND THE PRODUCT CYCLE: VIDEO GAMES IN THE U.S., 1994-2002*
Abstract
We examine the importance of indirect network effects in the U.S. video game market between 1994 and 2002. The diffusion of game systems is analyzed by the interaction between console adoption decisions and software supply decisions. Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later. We also find a degree of inertia in the software market that does not exist in the hardware market. This observation implies that software providers continue to exploit the installed base of hardware users after hardware demand has slowed.
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Cites
Network effects without network externalities
Chou, C.-F., & Shy, O. (1990) · International Journal of Industrial Organization · doi:10.1016/0167-7187(90)90019-w · Cited by 249
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Cennamo, C., & Santalo, J. (2013) · Strategic Management Journal · doi:10.1002/smj.2066 · Cited by 780
Boudreau, K. J. (2012) · Organization Science · doi:10.1287/orsc.1110.0678 · Cited by 676
The Role of Artificial Intelligence and Data Network Effects for Creating User Value
Gregory, R. W., Henfridsson, O., Kaganer, E., & Kyriakou, H. (2021) · Academy of Management Review · doi:10.5465/amr.2019.0178 · Cited by 540
Competing in Digital Markets: A Platform-Based Perspective
Cennamo, C. (2021) · Academy of Management Perspectives · doi:10.5465/amp.2016.0048 · Cited by 487
Metadata
- Authors
- CLEMENTS, M. T., & OHASHI, H.
- Venue
- Journal of Industrial Economics
- Publisher
- Wiley
- Published
- 2005-12
- Volume
- 53
- Issue
- 4
- Pages
- 515-542
- ISSN
- 0022-1821 (ISSN-L)
- 1467-6451
- OpenAlex
- W2966953171
- Cited by
- 397
- References
- 1
- FWCI
- 41.52
- Type
- journal article
- Language
- en
- Open access
- closed
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- CLEMENTS, M. T., & OHASHI, H. (2005). INDIRECT NETWORK EFFECTS AND THE PRODUCT CYCLE: VIDEO GAMES IN THE U.S., 1994-2002*. Journal of Industrial Economics. https://doi.org/10.1111/j.1467-6451.2005.00268.x
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