Markets with network externalities: Non-cooperation vs. Cooperation in R&D

Lena Milstein*, Asher Tishler

*Corresponding author for this work

Research output: Contribution to conferencePaperpeer-review

3 Scopus citations

Abstract

This paper examines three strategies for R&D investments in oligopoly markets with network externalities. The Cell project of the Sony-Toshiba-IBM R&D joint venture motivates our analysis and presentation. In addition to the particular characteristics that apply to the Cell project, we develop formal economic explanations for observed R&D investment strategies in markets with network externalities. Our analytical model suggests that the degree of product compatibility, initial market shares, and the intensity of the product-market competition are instrumental to the R&D strategy in these markets. The paper ties together the literature on information technologies, strategy, and economics, and derives optimal patterns of strategic behavior in the R&D (pre-production) stage in oligopoly markets with network externalities.

Original languageEnglish
StatePublished - 2006
Event14th European Conference on Information Systems, ECIS 2006 - Goteborg, Sweden
Duration: 12 Jun 200614 Jun 2006

Conference

Conference14th European Conference on Information Systems, ECIS 2006
Country/TerritorySweden
CityGoteborg
Period12/06/0614/06/06

Keywords

  • Compatibility
  • Cooperation in r&d
  • Network externalities
  • Product innovation

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