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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/28396

Title: Indirect Network Effects and the Product Cycle: Video Games in the U.S., 1994-2002
Authors: Clements, Matthew T. - University of Texas
Ohashi, Hiroshi - University of Tokyo
Keywords: indirect network effects, penetration pricing, software variety
Issue Date: 2004
Series/Report no.: NET Institute Working Paper;04-01
Abstract: 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.
URI: http://hdl.handle.net/2451/28396
Appears in Collections:NET Institute Working Papers Series

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