Snowball: A dynamic oligopoly model with indirect network effects

Sarit Markovich*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

26 Scopus citations


Allowing for innovation dynamics in the software market, this paper studies the conditions under which standardization in the hardware market arises and persists over time. In the model, software firms repeatedly invest in quality upgrades, compete in the product market, and make exit as well as entry decisions. The results show that, in general, excess inertia does not occur. A platform becomes the standard in a market only if it is better than the competing platforms. Furthermore, low overall rates of innovation always lead to variety; conversely, the higher the speed of innovation, the more likely standardization is.

Original languageEnglish (US)
Pages (from-to)909-938
Number of pages30
JournalJournal of Economic Dynamics and Control
Issue number3
StatePublished - Mar 2008


  • Dynamics
  • Market structure
  • Network effects
  • Oligopoly

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics


Dive into the research topics of 'Snowball: A dynamic oligopoly model with indirect network effects'. Together they form a unique fingerprint.

Cite this