Competition in wearable device market: the effect of network externality and product compatibility
The rapid growth in consumer adoption of wearable devices has garnered the attention of both practitioners and academia. Competition in the wearable device market is both substantial and complicated. In this study, we investigate the impact of network externality on wearable device competition in a...
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| Veröffentlicht in: | Electronic commerce research 2017-09, Vol.17 (3), p.335-359 |
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| creator | Wu, Jing Li, He Lin, Zhangxi Zheng, Haichao |
| description | The rapid growth in consumer adoption of wearable devices has garnered the attention of both practitioners and academia. Competition in the wearable device market is both substantial and complicated. In this study, we investigate the impact of network externality on wearable device competition in a two-dimensional product differentiation model. We consider a market that has a broad array of products (horizontal differentiation) and various quality levels (vertical differentiation). We study two types of network externalities according to the product compatibility in two types of market structures. Our model indicates that firm profits are decreased by network externalities in horizontal dominance. Network externality also increases (decreases) the higher-quality (lower-quality) firm’s profit in vertical dominance. Moreover, firms should ensure that their products are incompatible with those of rivals when network externality is large, and they should release compatible products when network externality is small in horizontal dominance. Firms should always ensure that their products are compatible with those of competitors in vertical dominance. |
| doi_str_mv | 10.1007/s10660-016-9227-6 |
| format | Article |
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Competition in the wearable device market is both substantial and complicated. In this study, we investigate the impact of network externality on wearable device competition in a two-dimensional product differentiation model. We consider a market that has a broad array of products (horizontal differentiation) and various quality levels (vertical differentiation). We study two types of network externalities according to the product compatibility in two types of market structures. Our model indicates that firm profits are decreased by network externalities in horizontal dominance. Network externality also increases (decreases) the higher-quality (lower-quality) firm’s profit in vertical dominance. Moreover, firms should ensure that their products are incompatible with those of rivals when network externality is large, and they should release compatible products when network externality is small in horizontal dominance. 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Competition in the wearable device market is both substantial and complicated. In this study, we investigate the impact of network externality on wearable device competition in a two-dimensional product differentiation model. We consider a market that has a broad array of products (horizontal differentiation) and various quality levels (vertical differentiation). We study two types of network externalities according to the product compatibility in two types of market structures. Our model indicates that firm profits are decreased by network externalities in horizontal dominance. Network externality also increases (decreases) the higher-quality (lower-quality) firm’s profit in vertical dominance. Moreover, firms should ensure that their products are incompatible with those of rivals when network externality is large, and they should release compatible products when network externality is small in horizontal dominance. Firms should always ensure that their products are compatible with those of competitors in vertical dominance.</description><subject>Business and Management</subject><subject>Compatibility</subject><subject>Competition</subject><subject>Computer Communication Networks</subject><subject>Data Structures and Information Theory</subject><subject>Differentiation</subject><subject>Dominance</subject><subject>e-Commerce/e-business</subject><subject>Economic models</subject><subject>Externalities (Economics)</subject><subject>Externality</subject><subject>Forecasts and trends</subject><subject>IT in Business</subject><subject>Marketing research</subject><subject>Markets</subject><subject>Operations Research/Decision Theory</subject><subject>Product differentiation</subject><subject>Quality</subject><subject>Two dimensional models</subject><subject>Wearable computers</subject><subject>Wearable technology</subject><issn>1389-5753</issn><issn>1572-9362</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2017</creationdate><recordtype>article</recordtype><sourceid>BENPR</sourceid><recordid>eNp1kMtOAyEUhidGE-vlAdyRuB49wAwM7kzjLWnipnvCMAfFtkMF6uXtpRkXbgwLyOH_Tv58VXVB4YoCyOtEQQiogYpaMSZrcVDNaCtZrbhgh-XNO1W3suXH1UlKbwAMJGtmVT8Pmy1mn30YiR_JJ5po-jWSAT-8RbIxcYX5huRXJOgc2kyCIyPmzxBXBL8yxtGsff4mZhzINoZhVyK2LDXZ937_c1YdObNOeP57n1bL-7vl_LFePD88zW8XteWdzDXrG9q6pmMDAydbxZAb3lDb9pSa1lrRGhgU9GUsRW8NNoJL1YBzPVg28NPqclpbSrzvMGX9Fnb7cklTxRoGlCpVUldT6sWsUfvRhRyNLWfAjbdhROfL_FbSjsuuA1kAOgE2hpQiOr2Nvlj51hT0Xr2e1OuiXu_Va1EYNjGpZMcXjH-q_Av9AOz7h3k</recordid><startdate>20170901</startdate><enddate>20170901</enddate><creator>Wu, Jing</creator><creator>Li, He</creator><creator>Lin, Zhangxi</creator><creator>Zheng, Haichao</creator><general>Springer US</general><general>Springer</general><general>Springer Nature B.V</general><scope>AAYXX</scope><scope>CITATION</scope><scope>3V.</scope><scope>7SC</scope><scope>7TA</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>8AL</scope><scope>8AO</scope><scope>8FD</scope><scope>8FE</scope><scope>8FG</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>ARAPS</scope><scope>AZQEC</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>BGLVJ</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FRNLG</scope><scope>F~G</scope><scope>GNUQQ</scope><scope>HCIFZ</scope><scope>JG9</scope><scope>JQ2</scope><scope>K60</scope><scope>K6~</scope><scope>K7-</scope><scope>L.-</scope><scope>L7M</scope><scope>L~C</scope><scope>L~D</scope><scope>M0C</scope><scope>M0N</scope><scope>P5Z</scope><scope>P62</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope></search><sort><creationdate>20170901</creationdate><title>Competition in wearable device market: the effect of network externality and product compatibility</title><author>Wu, Jing ; Li, He ; Lin, Zhangxi ; Zheng, Haichao</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c387t-2b415f482d20f7592e3a341c5b11a5cc65a0d90be3a76bcae4637940ffb0c2d3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2017</creationdate><topic>Business and Management</topic><topic>Compatibility</topic><topic>Competition</topic><topic>Computer Communication Networks</topic><topic>Data Structures and Information Theory</topic><topic>Differentiation</topic><topic>Dominance</topic><topic>e-Commerce/e-business</topic><topic>Economic models</topic><topic>Externalities (Economics)</topic><topic>Externality</topic><topic>Forecasts and trends</topic><topic>IT in Business</topic><topic>Marketing research</topic><topic>Markets</topic><topic>Operations Research/Decision Theory</topic><topic>Product differentiation</topic><topic>Quality</topic><topic>Two dimensional models</topic><topic>Wearable computers</topic><topic>Wearable technology</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Wu, Jing</creatorcontrib><creatorcontrib>Li, He</creatorcontrib><creatorcontrib>Lin, Zhangxi</creatorcontrib><creatorcontrib>Zheng, Haichao</creatorcontrib><collection>CrossRef</collection><collection>ProQuest Central (Corporate)</collection><collection>Computer and Information Systems Abstracts</collection><collection>Materials Business File</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Computing Database (Alumni Edition)</collection><collection>ProQuest Pharma Collection</collection><collection>Technology Research Database</collection><collection>ProQuest SciTech Collection</collection><collection>ProQuest Technology Collection</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>Advanced Technologies & Aerospace Collection</collection><collection>ProQuest Central Essentials</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>Technology Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>ProQuest Central Student</collection><collection>SciTech Premium Collection</collection><collection>Materials Research Database</collection><collection>ProQuest Computer Science Collection</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>Computer Science Database</collection><collection>ABI/INFORM Professional Advanced</collection><collection>Advanced Technologies Database with Aerospace</collection><collection>Computer and Information Systems Abstracts Academic</collection><collection>Computer and Information Systems Abstracts Professional</collection><collection>ABI/INFORM Global</collection><collection>Computing Database</collection><collection>Advanced Technologies & Aerospace Database</collection><collection>ProQuest Advanced Technologies & Aerospace Collection</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><jtitle>Electronic commerce research</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Wu, Jing</au><au>Li, He</au><au>Lin, Zhangxi</au><au>Zheng, Haichao</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Competition in wearable device market: the effect of network externality and product compatibility</atitle><jtitle>Electronic commerce research</jtitle><stitle>Electron Commer Res</stitle><date>2017-09-01</date><risdate>2017</risdate><volume>17</volume><issue>3</issue><spage>335</spage><epage>359</epage><pages>335-359</pages><issn>1389-5753</issn><eissn>1572-9362</eissn><abstract>The rapid growth in consumer adoption of wearable devices has garnered the attention of both practitioners and academia. Competition in the wearable device market is both substantial and complicated. In this study, we investigate the impact of network externality on wearable device competition in a two-dimensional product differentiation model. We consider a market that has a broad array of products (horizontal differentiation) and various quality levels (vertical differentiation). We study two types of network externalities according to the product compatibility in two types of market structures. Our model indicates that firm profits are decreased by network externalities in horizontal dominance. Network externality also increases (decreases) the higher-quality (lower-quality) firm’s profit in vertical dominance. Moreover, firms should ensure that their products are incompatible with those of rivals when network externality is large, and they should release compatible products when network externality is small in horizontal dominance. Firms should always ensure that their products are compatible with those of competitors in vertical dominance.</abstract><cop>New York</cop><pub>Springer US</pub><doi>10.1007/s10660-016-9227-6</doi><tpages>25</tpages></addata></record> |
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| subjects | Business and Management Compatibility Competition Computer Communication Networks Data Structures and Information Theory Differentiation Dominance e-Commerce/e-business Economic models Externalities (Economics) Externality Forecasts and trends IT in Business Marketing research Markets Operations Research/Decision Theory Product differentiation Quality Two dimensional models Wearable computers Wearable technology |
| title | Competition in wearable device market: the effect of network externality and product compatibility |
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