The Impact of Users’ Commitments on Technological Progress in Network Industries

This essay analyzes whether (inherently incompatible) new superior network technologies prevail over established ones, even though early switchers are worse off at the beginning. Although we consider one homogenous population, only, one should keep in mind that this problem can be similar to the harmonization problem: the analysis in section 3 has shown that agents might stick with their domestic standard, even if they are better off if all of them switched to the alien one. Obviously, in such a situation, harmonization is nothing more than transition to a superior standard.