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The Evolution of Network Industries: Lessons from the Conquest of the Online Frontier, 1979-95

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  • Martin Campbell-Kelly
  • Daniel Garcia-Swartz
  • Anne Layne-Farrar

Abstract

In this paper we dissect the competitive dynamics of a network industry that has not been systematically studied in the past—the consumer-oriented online networks of the pre-1995 era. After briefly reconstructing the historical evolution of the industry we focus on a number of issues at the intersection of theory and data: the importance of direct and indirect network effects, tipping to a dominant player and the entry strategies adopted by two different waves of entrants. We also analyse price wars and the displacement of the leader in the first half of the 1990s. In the final section we focus on some remaining puzzles that suggest directions for further theoretical and empirical research.

Suggested Citation

  • Martin Campbell-Kelly & Daniel Garcia-Swartz & Anne Layne-Farrar, 2008. "The Evolution of Network Industries: Lessons from the Conquest of the Online Frontier, 1979-95," Industry and Innovation, Taylor & Francis Journals, vol. 15(4), pages 435-455.
    • Handle: RePEc:taf:indinn:v:15:y:2008:i:4:p:435-455
    DOI: 10.1080/13662710802239513
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    References listed on IDEAS

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    1. David S. Evans & Richard Schmalensee, 2005. "The Industrial Organization of Markets with Two-Sided Platforms," NBER Working Papers 11603, National Bureau of Economic Research, Inc.
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