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Vaporware as a Means of Entry Deterrence

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  • Marco A. Haan

Abstract

Firms in the computer industry are often accused of vaporware, the untruthful pre‐announcement of a new version of their product. By claiming they have a new product, critics argue, these firms try to deter potential entrants. The paper analyzes this phenomenon. It shows that vaporware is an equilibrium strategy in a signaling game in which the possibility to market a new product is private information. In this model, the possibility of vaporware can hurt consumers, also in the case the incumbent does have a new version of its product. The welfare effects of vaporware are ambiguous.

Suggested Citation

  • Marco A. Haan, 2003. "Vaporware as a Means of Entry Deterrence," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 345-358, September.
    • Handle: RePEc:bla:jindec:v:51:y:2003:i:3:p:345-358
    DOI: 10.1111/1467-6451.00204
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    Cited by:

    1. Arai Koki, 2024. "Law and Economics of Language Model Development: Empirical Examination of Corporate Strategies and Vaporware Claims," Asian Journal of Law and Economics, De Gruyter, vol. 15(1), pages 31-53, April.
    2. Jos Jansen, 2005. "The Effects of Disclosure Regulation of an Innovative Firm," CESifo Working Paper Series 1459, CESifo.
    3. Cave, Jonathan, 2009. "Prisoners of our own Device – an evolutionary perspective on lock-in, technology clusters and telecom regulation," MPRA Paper 83199, University Library of Munich, Germany.
    4. Lam, Wing Man Wynne, 2014. "Ex Ante and Ex Post Investments in Cybersecurity," TSE Working Papers 14-519, Toulouse School of Economics (TSE).
    5. Claussen, Jörg & Kretschmer, Tobias & Spengler, Thomas, 2010. "Market leadership through technology – Backward compatibility in the U.S. Handheld Video Game Industry," Discussion Papers in Business Administration 12716, University of Munich, Munich School of Management.
    6. Jong-Hee Hahn & Jin-Hyuk Kim, 2012. "Monopoly R&D and Compatibility Decisions in Network Industries," Working papers 2012rwp-43, Yonsei University, Yonsei Economics Research Institute.
    7. Lam, Wing Man Wynne, 2016. "Attack-prevention and damage-control investments in cybersecurity," Information Economics and Policy, Elsevier, vol. 37(C), pages 42-51.
    8. Romeo Turcan, 2011. "Toward a theory of international new venture survivability," Journal of International Entrepreneurship, Springer, vol. 9(3), pages 213-232, September.
    9. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107069978, October.
    10. Lam, W., 2015. "Attack-Deterring and Damage-Control Investments in Cybersecurity," LIDAM Discussion Papers CORE 2015023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Kerstan, Sven & Kretschmer, Tobias & Muehlfeld, Katrin, 2012. "The dynamics of pre-market standardization," Information Economics and Policy, Elsevier, vol. 24(2), pages 105-119.
    12. Choi, Jay Pil & Kristiansen, Eirik Gaard & Nahm, Jae, 2019. "Strategic Product Pre-announcements in Markets with Network Effects," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 60(1), pages 1-20, June.
    13. Heli Koski & Tobias Kretschmer, 2004. "Survey on Competing in Network Industries: Firm Strategies, Market Outcomes, and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 5-31, March.
    14. Ozge Turut & Elie Ofek, 2012. "Innovation Strategy and Entry Deterrence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 583-631, September.
    15. Michelle Y. Lu & Jiwoong Shin, 2018. "A Model of Two-Sided Costly Communication for Building New Product Category Demand," Marketing Science, INFORMS, vol. 37(3), pages 382-402, May.
    16. Claussen, Jörg & Kretschmer, Tobias & Spengler, Thomas, 2010. "Backward Compatibility to Sustain Market Dominance – Evidence from the US Handheld Video Game Industry," Discussion Papers in Business Administration 11499, University of Munich, Munich School of Management.
    17. Elie Ofek & Özge Turut, 2013. "Vaporware, Suddenware, and Trueware: New Product Preannouncements Under Market Uncertainty," Marketing Science, INFORMS, vol. 32(2), pages 342-355, March.

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