The provision of (two-way) converters in the transition process to a new incompatible technology

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Abstract

This paper analyzes the dynamic provision of converters in the transition process between two incompatible technologies. I derive the equilibrium behavior in the provision of converters and compare it to the socially optimal outcome. I find that there can be two types of market inefficiency in the provision of converters. First, converters can be supplied by the "wrong" group. Second, the timing of provision may be too late since the providers of converters ignore the positive externality that their provision would confer on the users of the rival technology.

Original languageEnglish
Pages (from-to)139-153
Number of pages15
JournalJournal of Industrial Economics
Volume45
Issue number2
DOIs
Publication statusPublished - 1997 Jun

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting(all)
  • Economics and Econometrics

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