@article{Church:275508,
      recid = {275508},
      author = {Church, Jeffrey and Gandal, Neil},
      title = {Complementary Network Externalities and Technological  Adoption},
      address = {1991-02},
      number = {2123-2018-4903},
      series = {Working Paper No. 5-91},
      pages = {30},
      year = {1991},
      abstract = {We address the adoption of technology when there are  network externalities and networks are characterized by  complementary products produced by different firms. We show  that the market outcome is efficient if the software firms  are monopolistic competitors. If the software firms are  Bertrand competitors, a hardware technology with lower  software development costs is adopted for many parameter  values for which it is socially optimal to adopt the other  technology. The overadoption is due to a discrepancy  between the private and social value of having a larger  network: this divergence is increasing in the software  development costs. We also examine various contractual  arrangements between hardware firms and software firms  which internalize the network externality.},
      url = {http://ageconsearch.umn.edu/record/275508},
      doi = {https://doi.org/10.22004/ag.econ.275508},
}