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Vaporware: An Expanded Equilibrium

By Eric Chown, Supervised Dr and Vincent Crawford Chown


Software companies are often accused of using vaporware: a fallacious preemptive announcement of a new product in an attempt to ward off potential competitors. While achieving this end, vaporware has harmful repercussions on consumer demand for the current product. This essay examines the cases in which vaporware can be used successfully by analyzing the balance between costs and benefits of vaporware in a simple two period game. This model is then expanded to include mitigating factors such as the degree to which the announced product renders previous product obsolete, firm size, reputation, and market structure. Industrial production has had a whole new dimension added to it over the past 40 years. With the invention of the computer, came the creation of the software industry. The software industry has a very different production dynamic than most othe

Year: 2005
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