We investigate how market shares change when a new, superior technology exhibiting network externalities is introduced in a market initially dominated by an old technology. This is done under the assumption that consumers are heterogeneous in their valuation of technology quality and network externalities and that goods are not (perfectly) durable and thus have to be bought repeatedly. When both technologies are unsponsored, the old technology dominates when the quality difference is small, and it disappears when the quality difference is large. When the new technology is sponsored, the relationship between the quality difference and the long-run market share of the new technology is non-monotonic and the old technology always continues to exist

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Keywords externalities (economics), industrial concentration, market penetration, market share, market share dynamics, network externalities, technological progress, technological transfer, technology, technology adoption
JEL Oligopoly and Other Forms of Market Imperfection (jel D43), Market Structure, Firm Strategy, and Market Performance (jel L1), Oligopoly and Other Imperfect Markets (jel L13)
Persistent URL dx.doi.org/10.1007/s00191-007-0065-5, hdl.handle.net/1765/11672
Journal Journal of Evolutionary Economics
Janssen, M.C.W, & Mendys, E. (2007). Evolution of market shares with repeated purchases and heterogeneous network externalities. Journal of Evolutionary Economics, 17(5), 551–577. doi:10.1007/s00191-007-0065-5