"Indirect Network Effects and the Product Cycle: Video Games in the U.S., 1994-2002"

This paper examines the importance of indirect network effects in the U.S.video game market between 1994 and 2002. The diffusion of game systems is analyzed by the interaction between console adoption decisions and software supply decisions. Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later. The paper also finds a degree of inertia in the software market that does not exist in the hardware market. This observation implies that software providers continue to exploit the installed base of hardware users after hardware demand has slowed.

Indirect Network Effects and the Product Cycle: Video Games in the U.S., 1994-2002

This paper examines the importance of indirect network effects in the U.S. video game market between 1994 and 2002. The diffusion of game systems is analyzed by the interaction between console adoption decisions and software supply decisions. Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later. The paper also finds a degree of inertia in the software market that does not exist in the hardware market. This observation implies that software providers continue to exploit the installed base of hardware users after hardware demand has slowed

Software Exclusivity and the Scope of Indirect Network Effects in the U.S. Home Video Game Market

This paper investigates the scope of indirect network effects in the home video game industry. We argue that the increasing prevalence of non-exclusive software gives rise to indirect network effects that exist between users of competing and incompatible hardware platforms. This is because software non-exclusivity, like hardware compatibility, allows a software firm to sell to a market broader than a single platform's installed base, leading to a dependence of any particular platform's software on all firms' installed bases. We look for evidence of these market-wide network effects by estimating a model of hardware demand and software supply. Our software supply equation allows the supply of games for a particular platform to depend not only on the installed base of that platform, but also on the installed base of competing platforms. Our results indicate the presence of both a platform-specific network effect and -in recent years- a cross-platform (or generation-wide) network effect. Our finding that the scope of indirect network effects in this industry has widened suggests one reason that this market, which is often cited as a canonical example of one with strong indirect network effects, is no longer dominated by a single platform

Indirect Network Effects and the Product Cycle: Video Games in the U.S., 1994-2002

This paper examines the importance of indirect network effects in the U.S. video game market between 1994 and 2002. The diffusion of game systems is analyzed by the interaction between console adoption decisions and software supply decisions. Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later. The paper also finds a degree of inertia in the software market that does not exist in the hardware market. This observation implies that software providers continue to exploit the installed base of hardware users after hardware demand has slowed

Market leadership through technology – Backward compatibility in the U.S. Handheld Video Game Industry

The introduction of a new product generation forces incumbents in network industries to rebuild their installed base to maintain an advantage over potential entrants. We study if backward compatibility moderates this process of rebuilding an installed base. Using a structural model of the U.S. market for handheld game consoles, we show that backward compatibility lets incumbents transfer network effects from the old generation to the new to some extent but that it also reduces supply of new software. We examine the tradeoff between technological progress and backward compatibility and find that backward compatibility matters less if there is a large technological leap between two generations. We subsequently use our results to assess the role of backward compatibility as a strategy to sustain market leadership

Backward Compatibility to Sustain Market Dominance – Evidence from the US Handheld Video Game Industry

The introduction of a new product generation forces incumbents in network industries to rebuild their installed base to maintain an advantage over potential entrants. We study if backward compatibility can help moderate this process of rebuilding an installed base. Using a structural model of the US market for handheld game consoles, we show that backward compatibility lets incumbents transfer network effects from the old generation to the new to some extent but that it also reduces supply of new software. We also find that backward compatibility matters most shortly after the introduction of a new generation. Finally, we examine the tradeoff between technological progress and backward compatibility and find that backward compatibility matters less if there is a large technological leap between two generations. We subsequently use our results to assess the role of backward compatibility as a strategy to sustain a dominant market position

Traceability system for capturing, processing and providing consumer-relevant information about wood products: System solution and its economic feasibility

Current research and practice reports indicate the existence of purchase barriers concerning eco-friendly products, e.g. wood products. These can be ascribed to consumers' mistrust regarding the non-observable environmental impact of wood products. To counter the mistrust, wood products are commonly endowed with eco-labels, which may be perceived mostly as a marketing tool, therefore not fulfilling their intended purpose. Current studies have shown that providing consumers with wood product information based on traceability systems increases product trust and purchase intentions, with those information items most valued by consumers being identified as well. Based on this, the paper proposes a traceability information system for the capturing, processing, and provision of product information using examples of wood furniture. Furthermore, a cost-benefit model for the proposed solution is developed. The calculations indicate the possibility of implementing traceability at the item level based on a four-layer system architecture enabling the capture and delivery of all information valued by consumers at acceptable costs. The proposed system helps to overcome purchase barriers of eco-friendly products, increasing consumers' product trust and purchase intentions

Talking toilets: evaluating software and hardware oriented rural sanitation approaches in northern India

This paper presents a 2011 study of India’s Total Sanitation Campaign (TSC). Qualitative methods were used to study six villages in Haryana and Uttar Pradesh. The research aimed to determine how implementations and outcomes compare in Community-led Total Sanitation (software-oriented) and conventional (hardware-oriented) TSC approaches. Despite a national guideline that called for a demand-driven, community-led, incentive-based TSC, in reality most interventions were supply-led, infrastructure-centric, and subsidy-based. CLTS interventions were more awareness-focused, involving longer-term interaction with households. In conventional TSC interventions, excessive focus on construction and subsidies drove supply-led tendencies, neglect of software and participation, and exclusion of non-poor and lower-caste households. CLTS villages tended to achieve more sustequitable (sustainable and equitable) access and usage than conventional villages. Levels of local government capacity and village leadership quality were key to intervention success