Technology revolutions in the presence of network externalities

The purpose of this paper is to investigate the effect of varying consumer preferences over technology advance and network size on the timing and frequency of new technology adoption in the presence of installed bases resulting from network externalities. The paper shows that the duration of each adopted technology and the frequency of technology adoptions depend on (a) whether (in consumers' perspectives) the network size effect is a substitute for or a complement to the quality of the technologies; (b) the degree of compatibility of new technologies with the old technology; and (c) the technology growth rate and consumer population size.