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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/29468
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| Title: | Entrepreneurial Innovations in Network Industries |
| Authors: | Norback, Pehr-Johan - Research Institute of Industrial Economics (IFN)
Persson, Lars - Research Institute of Industrial Economics (IFN)
Tag, Joacim - Research Institute of Industrial Economics (IFN) |
| Keywords: | Entrepreneurship; entry; compatibility; innovation; network effects; standardization |
| Issue Date: | 2008 |
| Series/Report no.: | Net Institute Working Paper;08-02 |
| Abstract: | We contribute to the literature network effects by allowing
entrepreneurs to sell their innovations to incumbents in addition to
entering the industry. We identify three new effects. Stronger network
effects make selling innovations attractive, as incumbents bid up the
sales price in fear of letting a rival obtain the innovation. This
improves innovation incentives. Increased compatibility, however,
reduces innovation incentives by reducing the relative advantage the
owner of the innovation gets, in turn resulting in a lower sales price.
Finally, bidding competition for innovations is crucial. Innovation
waves can occur in network industries as bidding competition is fierce
in young industries with several players competing for the top spot, but
weak in mature industries with a clear leader. |
| URI: | http://hdl.handle.net/2451/29468 |
| Appears in Collections: | NET Institute Working Papers Series
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