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Bandwagon Effects and Long Run Technology Choice

Authors
Journal
Games and Economic Behavior
0899-8256
Publisher
Elsevier
Publication Date
Volume
22
Issue
1
Identifiers
DOI: 10.1006/game.1997.0563
Disciplines
  • Mathematics

Abstract

Abstract We introduce a class of “bandwagon games” which generalizes the notion of network externalities when there are more than two competing technologies and various degrees of partial compatibilities among them. We then apply the stochastic evolutionary approach to this class of games. We determine the conditions under which a globally pairwise risk-dominanttechnology is the long-run equilibrium (LRE). We also show the conditions under which one technology takes over another technology by directly switching consumers from the latter to the former (also called direct domination). Parametric examples illustrate the properties of the technology which is the LRE. Journal of Economic LiteratureClassification Numbers: C72, C73.

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