Snowball - The Evolution of Dynamic Oligopolies with Network Externalities

This paper considers a dynamic oligopolistic market for complementary services (software),in which consumers first decide which one of the two incompatible durable goods (hardware)they wish to adopt and then buy compatible software. Software firms decide whether or not toenter or exit the market, which technology to produce for and how much to invest in thequality level of their products. The results show that when the probability of softwareinnovation is low, in the long run the industry...