Reconceptualizing and expanding the positive feedback network effects model: A case study

During the 1980s, economists developed the concept of positive network effects and switching costs as the key dynamics of de facto standards competition. They concluded that a positive feedback loop usually “tips” a market to the standard with the most users and complementary assets. While recent scholars have acknowledged that not all markets tip, and suggested some possible limitations on this phenomena, these limitations have not been integrated systematically into a model for competition in these industries. Using examples drawn from the standards contests of the past 20 years, this case study develops an integrated model for competition in these industries.