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Coordination vs. Differentiation in a Standards War: 56K Modems

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  • Angelique Augereau
  • Shane Greenstein
  • Marc Rysman

Abstract

56K modems were introduced under two competing incompatible standards. We show the importance of competition between Internet Service Providers in the adoption process. We show that ISPs were less likely to adopt the technology that more competitors adopted. This result is particularly striking given that industry participants expected coordination on one standard or the other. We speculate about the role of ISP differentiation in preventing the market form achieving standardization until a government organization intervened.

Suggested Citation

  • Angelique Augereau & Shane Greenstein & Marc Rysman, 2004. "Coordination vs. Differentiation in a Standards War: 56K Modems," NBER Working Papers 10334, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10334
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    Cited by:

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    2. Sanchez Villalba, Miguel & Martinez Gorricho, Silvia, 2017. "Entry in Beauty-Contest Games," MPRA Paper 80515, University Library of Munich, Germany.
    3. Matthew Gentzkow, 2006. "Valuing New Goods in a Model with Complementarities: Online Newspapers," NBER Working Papers 12562, National Bureau of Economic Research, Inc.
    4. Tobias Kretschmer, 2008. "Splintering And Inertia In Network Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 56(4), pages 685-706, December.
    5. Cantillon, Estelle & Yin, Pai-Ling, 2008. "Competition between Exchanges: Lessons from the Battle of the Bund," CEPR Discussion Papers 6923, C.E.P.R. Discussion Papers.
    6. Xiao, Mo & Orazem, Peter, 2006. "Do Entry Conditions Vary over Time? Entry and Competition in the Broadband Market: 1999-2003," Staff General Research Papers Archive 12500, Iowa State University, Department of Economics.
    7. Tor Winston, 2006. "Innovation and Ex Ante Consideration of Licensing Terms in Standard Setting," EAG Discussions Papers 200603, Department of Justice, Antitrust Division.

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    More about this item

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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