DP3634 | The DVD Versus DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects

Publication Date

20/11/2002

JEL Code(s)

  • K21, L82

Keyword(s)

  • Product Preannouncements, standards, network effects

Programme Area(s)

  • Industrial Organization

Abstract

In this Paper, we empirically test for network effects and preannouncement effects in the DVD market. We do this by measuring the effect of potential (incompatible) competition on a network undergoing growth. We find that there are network effects. The data is generally consistent with the hypothesis that the preannouncement of DIVX temporarily slowed down the adoption of DVD technology.