DP3634 The DVD Versus DIVX Standard War: Empirical Evidence of Network Effects and Preannouncement Effects

Author(s): David Dranove, Neil Gandal
Publication Date: November 2002
Keyword(s): network effects, product preannouncements, standards
JEL(s): K21, L82
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3634

In this Paper, we empirically test for network effects and preannouncement effects in the DVD market. We do this by measuring the effect of potential (incompatible) competition on a network undergoing growth. We find that there are network effects. The data is generally consistent with the hypothesis that the preannouncement of DIVX temporarily slowed down the adoption of DVD technology.