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then came Cisco, and the rest is history : a history friendly model of the Local Area Networking industry

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  • R. Fontana
  • L. Zirulia

Abstract

We study the role that switching costs, compatibility, and mergers and acquisitions, play in influencing the evolution of a multi-market industry. By looking at the case of the Local Area Networking industry, we propose a history friendly model to replicate its evolution during the 1990s. Our model explains how a firm can start from a dominant position in one of the existing markets and exploit switching costs and compatibility to enter a new market when it opens. Mergers and acquisitions also play an important role as the new market is pioneered by a new start-up, which is soon acquired by the dominant incumbent. As a result of the acquisition, the acquiring firm becomes leader also in the new market.

Suggested Citation

  • R. Fontana & L. Zirulia, 2015. "then came Cisco, and the rest is history : a history friendly model of the Local Area Networking industry," Working Papers wp993, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp993
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    References listed on IDEAS

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    1. Igor Gurkov & Michael J. Morley, 2021. "Looking In The Rear-View Mirror: A Thirty-Five Year Retrospective On The Russian Automotive Industry," HSE Working papers WP BRP 64/MAN/2021, National Research University Higher School of Economics.
    2. Peili Yu & Junguo Shi & Bert M. Sadowski & Önder Nomaler, 2020. "Catching Up in the Face of Technological Discontinuity: Exploring the Role of Demand Structure and Technological Regimes in the Transition from 2G to 3G in China," Journal of Evolutionary Economics, Springer, vol. 30(3), pages 815-841, July.
    3. Gianluca Capone & Franco Malerba & Richard R. Nelson & Luigi Orsenigo & Sidney G. Winter, 2019. "History friendly models: retrospective and future perspectives," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 9(1), pages 1-23, March.
    4. Sean T. Hsu & Susan K. Cohen, 2022. "Overcoming the Incumbent Dilemma: The Dual Roles of Multimarket Contact During Disruption," Journal of Management Studies, Wiley Blackwell, vol. 59(2), pages 319-348, March.

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    More about this item

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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