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The Role of Network Effects in the US VCR Market, 1978–1986

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  • Hiroshi Ohashi

Abstract

This paper estimates the importance of indirect network effects in the US video cassette recorder (VCR) market between 1978 and 1986. Estimation reveals the significant role of networks in the format competition between VHS and Beta. The paper also finds that if Sony, the system sponsor of Beta, had aggressively introduced its VCRs at the early stage of competition, Beta would likely have dominated the market in 1985; instead, the format disappeared in 1989. Finally, the paper measures consumer welfare for the value of network effects in VCRs, and assesses the consumer welfare effect of standardization.

Suggested Citation

  • Hiroshi Ohashi, 2003. "The Role of Network Effects in the US VCR Market, 1978–1986," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(4), pages 447-494, December.
    • Handle: RePEc:bla:jemstr:v:12:y:2003:i:4:p:447-494
    DOI: 10.1111/j.1430-9134.2003.00447.x
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    References listed on IDEAS

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    1. Neil Gandal & Shane Greenstein & David Salant, 1999. "Adoptions and Orphans in the Early Microcomputer Market," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 87-105, March.
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    4. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 317-343, October.
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    6. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
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