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Abstract
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Article Information:
How Network Externality and Compatibility Affect the R&D Risk Choices in a Duopoly Market
Mingqing Xing
Corresponding Author: Mingqing Xing
Submitted: November 24, 2012
Accepted: January 17, 2013
Published: May 28, 2013 |
Abstract:
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This study develops a duopoly model describing the optimal choice of R&D risk among R&D projects with the same expected outcome in a market exhibiting network externalities. It demonstrates that, when firms’ product is incompatible, the level of R&D risk increases in the intensity of network externality. However, when product is compatible, the impact of network externality on the R&D risk choices depends on the degree of market coverage. Moreover, firms carry on higher (resp. lower) risk R&D project when their product is incompatible than compatible in a full-coverage (resp. partial-coverage) market.
Key words: Compatibility, hotelling model, network externality, R&D risk, uncertainty , ,
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Cite this Reference:
Mingqing Xing, . How Network Externality and Compatibility Affect the R&D Risk Choices in a Duopoly Market. Research Journal of Applied Sciences, Engineering and Technology, (23): 5430-5434.
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ISSN (Online): 2040-7467
ISSN (Print): 2040-7459 |
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