SCBUS223 Lecture Notes - Lecture 3: Path Dependence, Complementary Good, Network Effect
14 Oct 2016
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Document Summary
Many industries experience strong pressure and select a few dominant designs over. Increasing returns to adoption: as more people adopt it, the price of technology goes down (outsourcing decreases cost per unit and the advantage is passed to the consumer and there is a return on investment) S curve: technology is being adopted more and the price decrease and as it reaches maturity, the product has either dominated the marketplace or leave (cannibalization, take over) Absorptive capacity: learn from your surroundings and bring in talent with a strong r&d or deep pockets to buy other companies. Knowledge base helps firms used an improve the technology meaning earlier adopted technology become better developed, making. Network externalities: network which helps and supports you, complementary products. Installed base: measure of the units actually used vs market share (units sold) and is an important variable for dominant designs in the market.
