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date: 27 February 2020

Abstract and Keywords

Firms' strategic behavior and managerial decision-making in network industries may differ from those in other industries. This happens because an increase in the demand for one brand need not reduce the demand for competing brands. In addition, consumers may be locked-in a particular standard, so they may bear a cost of switching to competing brands. Therefore, starting as early as from the design stage, managers must evaluate the implications of their choices of prices, technology standards, and the degree of compatibility of their own brands with the standards adopted by firms producing competing brands. This article analyzes some of the major issues facing managers operating in modern network industries.

Keywords: network industries, technology standards, compatible and incompatible brands, switching cost, firm's strategic behavior

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