1999/03 LEM Working Paper Series

Competing Technologies, Technological Monopolies and the Rate of Convergence to a Stable Market Structure
Bassanini A.P. and G.Dosi
Competing Technologies, Product Selection, Unbounded Returns, Network Externalities, Heterogeneity, Technological Monopolies

Empirically the diffusion of competing technologies most often displays either "lock-in" to a quasi-monopoly or apparent turbulence but rarely stable market-sharing. In contrast with widespread views, we show that, first, unbounded increasing returns are neither necessary nor sufficient to lead to technological monopolies. Rather, asymptotic patterns depend on the relative impact of increasing returns and the degree of adopters heterogeneity. Second, the unlikely empirical occurence of stable market-sharing is slower then to monopoly; thus, in the former case, the enviroment often changes before the market-share trajectory becomes stable.

Previous versions appeared as IIASA Interim Reports [IIASA, Laxemburg, Austria]

download pdf