Estimating the Costs of Standardization: Evidence from the Movie Industry

• 成果类型: Article
• 署名作者: Caoui, El Hadi
• 署名单位: University of Toronto; University of Toronto
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdac036
• 发表日期: 2023
• 页码: 597-633
• 关键词: network externalities; dynamic-models; vertical integration; technology adoption; US; MARKET; COMPETITION; diffusion; identification; compatibility

摘要

This article studies the decentralized adoption of a technology standard when network effects are present. If the new standard is incompatible with the current installed base, adoption may be inefficiently delayed. I quantify the magnitude of excess inertia in the switch of the movie distribution and exhibition industries from 35 mm film to digital. I specify and estimate a dynamic game of digital hardware adoption by theatres and digital movies supply by distributors. Counterfactual simulations establish that excess inertia reduces surplus by 16% relative to the first-best adoption path; network externalities explain 41% of the surplus loss. Targeted adoption subsidies or a mandate on digital distribution help bridge this welfare gap.