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Lernmaterialien für Management and Economics of Network Industries (Technology and Innovation) an der LMU München

Greife auf kostenlose Karteikarten, Zusammenfassungen, Übungsaufgaben und Altklausuren für deinen Management and Economics of Network Industries (Technology and Innovation) Kurs an der LMU München zu.

TESTE DEIN WISSEN
Explain the Pricing structures of Video games vs. PC operating systems considering the conclusions made in the "Model of Weyl" and the "Model of Hagiu".
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TESTE DEIN WISSEN
The "Model of Hagiu" additionally to the "Model of Weyl" suggests that the producers become more powerful if there is a high demand for variety in the products --> so they should be charged more fees e.g.. Gaming Consoles: Developers have high fixed costs and low variable costs (close to zero). So the net benefit of every consumer transaction is quite high (price of a game minus royalties) --> Consumers have to bear a high price of buying a game. So the net benefit of many consumers is rather low. --> So Developers pay more than Consumers. + demand vor variety is high PC operating systems: --> not much demand for variety. So less powerful producers --> the don't benefit from additional Consumers that much so the developers should pay so much.. --> Operating systems, especially Windows, are sold above costs while developers receive free software development kits and need not pay royalties.
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TESTE DEIN WISSEN
Explain the Idea behind the "Model of Brian Arthur" as a way to explain the development of 2 competing technologies.
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TESTE DEIN WISSEN
- There are two technologies available to adopters. - Insignificant events may give one of them a small initial advantage by chance (for no reason), so that consumers use this technology more. - Then it may improve more quickly than the other, so it appeals to an even larger proportion of potential users. --> Network effects - Earlier adoption and subsequent improvement leads to a dominant position.
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TESTE DEIN WISSEN
What is Inertia/excess- Inertia and Momentum?
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TESTE DEIN WISSEN
Inertia only means that the new technology doesn't get adopted. --> inertia on its own (no exess) can also be positive --> high switching cost ect.. Excess Inertia implies that the new technology would generate net benefits but no one will make the first move. --> technology doeasnt move as much as we would want to. Excess Momentum is the oposite, where a new technology gets adopted, even though is would generate net benefits to stick with the old one.
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TESTE DEIN WISSEN
How would the availability of complete Information affect excess inertia? What problems would occur if one would try to achieve that through simple communication?
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TESTE DEIN WISSEN
incomplete information causes excess inertia. --> so with complete Information Excess inertia would disappear. both forms of it. BUT: really hard to achieve in real life. best try: communication. --> problem: the people that are slightly opposed would exaggerate and say "they never switch" even though they eventually would... So the Problem of Symmetric excess inertia could be solved, but asymmetric excess inertia could even get worse through increased communication.
Lösung ausblenden
TESTE DEIN WISSEN
What is the difference between a disequilibrium- and a equilibrium approach?
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TESTE DEIN WISSEN
2 different basic assumptions on the diffusion process. disequilibrium approach says, that there is a point in time where not everybody behaves optimally. --> some people adopt, some don't, even though they should adopt.--> epidemic model suggests that, because the people that don't know about a new tech would adopt if they just knew... Equilibrium approach says that at anybody is happy with there decision, even if you tell them about the new tech. --> probit/rank approach & Strategic approach assume an equilibrium where everybody chooses consciously. --> they differ only in the amount of interaction between adopters
Lösung ausblenden
TESTE DEIN WISSEN
Does the Pricing structure (how much each side pays) of a Platform market affect the Market outcome (e.g. total volume of transactions)?
Lösung anzeigen
TESTE DEIN WISSEN
Intuition could lead us to expect the Market outcome not to change. Why? --> comparison to Taxes in traditional markets. --> In equilibrium, market outcome is independent of who pays the tax! (Supply or demand side) --> so if we see taxes as the "fees" in platform market we could expect the same outcome... BUT: We define a two-sided market as one in which the volume of transactions between end-users depends on the structure and not only on the overall level of the fees charged by the platform. SO in Platform markets the volume of transaction (e.g.) DOES depend on the Pricing structure.
Lösung ausblenden
TESTE DEIN WISSEN
How did the hardware compatibility vs. software exclusivity in the home video games market change? Why?
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TESTE DEIN WISSEN
Hardware typically incompatible across competitors, i.e. one console cannot run another console‘s games --> But Platform owners have also a decision to let developers run their Games on different platforms or exclusively - back in the days platform owners had a lot of bargaining power and made the developers be Exlusive. --> BUT: exclusiveness reduced from 40% to 13% over the last 20 years - Cost structure changed: --> game development costs skyrocketing --> porting costs diminishing - Also positive side effect of non exclusivity for the users (pressure for industry) because of cross platform indirect network effects (online gaming)
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TESTE DEIN WISSEN
Name 5 Strategies that Firms should pursue after winning a standards battle.
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TESTE DEIN WISSEN
Staying on your guard - technology marches forward - Every advantage will fade over time if you are not able to improve your technology. --> "lock in" is not ultimately safe ---> You need a migration path or roadmap for our technology. Commoditizing Complementary Products - Once you have won, you want to keep your network alive and healthy - Encourage a vibrant and competitive market for complements. Competing with your own installed base - How can you continue to grow when your product starts to reach market saturation? --> old problem for durable goods - Drive innovation even faster Leveraging your installed base - Use your installed base to leverage it into using other complementary products of yourself - but be careful about consumer and rivals’ reactions Licensing - Licensing can be considered as a means to win or avoid a standard battle ---> Consumers are less anxious about locking-in to a dominant technology ---> The sponsor can specify the technical details of the technology ---> Securing of suppliers for the new technology ---> may be optimal if expected network benefits are large
Lösung ausblenden
TESTE DEIN WISSEN
We defined 3 Degrees of price differentiation. Explain "Third Degree Price Discrimination".
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TESTE DEIN WISSEN
Different prices are charged to different groups of consumers, as the members systematically differ in their price sensitivity (e.g. student discount for mobile tariffs). --> again important to be careful of the social acceptance (differentiation in Students e.g. nice, but in Mac vs. Windows users not nice) --> BUT Third-degree price discrimination, as opposed to first-degree price discrimination, is very common on the internet.
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TESTE DEIN WISSEN
Gruber and Verboven Study goes deeper into the differences between Countries. Name 2 country specific characteristics.
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TESTE DEIN WISSEN
1. Waiting list for fixed line connection: --> A high unsatisfied demand for phones might increase diffusion of mobile phones. ---> Yet, a low relative level of fixed line telephony might hinder diffusion (no-one to call). Result: A large fixed-line waiting list initially lowers mobile penetration rates but leads to higher growth rates later on. 2. Large fixed network: ---> Might foster diffusion as the utility from owning a mobile phone is high even if the penetration of mobile phones is low. --->Might hinder diffusion since the need for mobile phones is lower if everyone has a fixed line connection. Result: A large fixed network has a positive impact on mobile phone diffusion.
Lösung ausblenden
TESTE DEIN WISSEN
Network effects are not always strong enough to force standardization. Name & explain three effects limiting the degree of dominance of a single technology.
Lösung anzeigen
TESTE DEIN WISSEN
- Consumer heterogeneity ---> can help niche products survive despite a dominant competitor --> preference for variety - Local network effects ---> Local network effects occur when the utility an agent obtains from choosing a specific product is increasing in the number of agents within his social neighbourhood that choose the same product. --> Overall network size is irrelevant --> e.g. Language - Existence of a sustainable mass of complementary products ---> With indirect network effects, there may exist a critical number beyond which an additional complementary product does not confer any significant additional value. --> e.g. if most users want to play a small selection of games, any system that can provide a sufficient number of such blockbuster games is viable.
Lösung ausblenden
TESTE DEIN WISSEN
Name 4 logics common in traditional markets, that are not transferable to platform markets.
Lösung anzeigen
TESTE DEIN WISSEN
1.An efficient price structure should be set to reflect relative costs. 2.A high price-cost margin indicates market power. --> no, competition needs to be looked at 3.A price below marginal cost indicates predation. --> low prices can just reflect the value of the other market side.. 4.In mature markets, price structures that do not reflect costs are no longer justified.
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Q:
Explain the Pricing structures of Video games vs. PC operating systems considering the conclusions made in the "Model of Weyl" and the "Model of Hagiu".
A:
The "Model of Hagiu" additionally to the "Model of Weyl" suggests that the producers become more powerful if there is a high demand for variety in the products --> so they should be charged more fees e.g.. Gaming Consoles: Developers have high fixed costs and low variable costs (close to zero). So the net benefit of every consumer transaction is quite high (price of a game minus royalties) --> Consumers have to bear a high price of buying a game. So the net benefit of many consumers is rather low. --> So Developers pay more than Consumers. + demand vor variety is high PC operating systems: --> not much demand for variety. So less powerful producers --> the don't benefit from additional Consumers that much so the developers should pay so much.. --> Operating systems, especially Windows, are sold above costs while developers receive free software development kits and need not pay royalties.
Q:
Explain the Idea behind the "Model of Brian Arthur" as a way to explain the development of 2 competing technologies.
A:
- There are two technologies available to adopters. - Insignificant events may give one of them a small initial advantage by chance (for no reason), so that consumers use this technology more. - Then it may improve more quickly than the other, so it appeals to an even larger proportion of potential users. --> Network effects - Earlier adoption and subsequent improvement leads to a dominant position.
Q:
What is Inertia/excess- Inertia and Momentum?
A:
Inertia only means that the new technology doesn't get adopted. --> inertia on its own (no exess) can also be positive --> high switching cost ect.. Excess Inertia implies that the new technology would generate net benefits but no one will make the first move. --> technology doeasnt move as much as we would want to. Excess Momentum is the oposite, where a new technology gets adopted, even though is would generate net benefits to stick with the old one.
Q:
How would the availability of complete Information affect excess inertia? What problems would occur if one would try to achieve that through simple communication?
A:
incomplete information causes excess inertia. --> so with complete Information Excess inertia would disappear. both forms of it. BUT: really hard to achieve in real life. best try: communication. --> problem: the people that are slightly opposed would exaggerate and say "they never switch" even though they eventually would... So the Problem of Symmetric excess inertia could be solved, but asymmetric excess inertia could even get worse through increased communication.
Q:
What is the difference between a disequilibrium- and a equilibrium approach?
A:
2 different basic assumptions on the diffusion process. disequilibrium approach says, that there is a point in time where not everybody behaves optimally. --> some people adopt, some don't, even though they should adopt.--> epidemic model suggests that, because the people that don't know about a new tech would adopt if they just knew... Equilibrium approach says that at anybody is happy with there decision, even if you tell them about the new tech. --> probit/rank approach & Strategic approach assume an equilibrium where everybody chooses consciously. --> they differ only in the amount of interaction between adopters
Mehr Karteikarten anzeigen
Q:
Does the Pricing structure (how much each side pays) of a Platform market affect the Market outcome (e.g. total volume of transactions)?
A:
Intuition could lead us to expect the Market outcome not to change. Why? --> comparison to Taxes in traditional markets. --> In equilibrium, market outcome is independent of who pays the tax! (Supply or demand side) --> so if we see taxes as the "fees" in platform market we could expect the same outcome... BUT: We define a two-sided market as one in which the volume of transactions between end-users depends on the structure and not only on the overall level of the fees charged by the platform. SO in Platform markets the volume of transaction (e.g.) DOES depend on the Pricing structure.
Q:
How did the hardware compatibility vs. software exclusivity in the home video games market change? Why?
A:
Hardware typically incompatible across competitors, i.e. one console cannot run another console‘s games --> But Platform owners have also a decision to let developers run their Games on different platforms or exclusively - back in the days platform owners had a lot of bargaining power and made the developers be Exlusive. --> BUT: exclusiveness reduced from 40% to 13% over the last 20 years - Cost structure changed: --> game development costs skyrocketing --> porting costs diminishing - Also positive side effect of non exclusivity for the users (pressure for industry) because of cross platform indirect network effects (online gaming)
Q:
Name 5 Strategies that Firms should pursue after winning a standards battle.
A:
Staying on your guard - technology marches forward - Every advantage will fade over time if you are not able to improve your technology. --> "lock in" is not ultimately safe ---> You need a migration path or roadmap for our technology. Commoditizing Complementary Products - Once you have won, you want to keep your network alive and healthy - Encourage a vibrant and competitive market for complements. Competing with your own installed base - How can you continue to grow when your product starts to reach market saturation? --> old problem for durable goods - Drive innovation even faster Leveraging your installed base - Use your installed base to leverage it into using other complementary products of yourself - but be careful about consumer and rivals’ reactions Licensing - Licensing can be considered as a means to win or avoid a standard battle ---> Consumers are less anxious about locking-in to a dominant technology ---> The sponsor can specify the technical details of the technology ---> Securing of suppliers for the new technology ---> may be optimal if expected network benefits are large
Q:
We defined 3 Degrees of price differentiation. Explain "Third Degree Price Discrimination".
A:
Different prices are charged to different groups of consumers, as the members systematically differ in their price sensitivity (e.g. student discount for mobile tariffs). --> again important to be careful of the social acceptance (differentiation in Students e.g. nice, but in Mac vs. Windows users not nice) --> BUT Third-degree price discrimination, as opposed to first-degree price discrimination, is very common on the internet.
Q:
Gruber and Verboven Study goes deeper into the differences between Countries. Name 2 country specific characteristics.
A:
1. Waiting list for fixed line connection: --> A high unsatisfied demand for phones might increase diffusion of mobile phones. ---> Yet, a low relative level of fixed line telephony might hinder diffusion (no-one to call). Result: A large fixed-line waiting list initially lowers mobile penetration rates but leads to higher growth rates later on. 2. Large fixed network: ---> Might foster diffusion as the utility from owning a mobile phone is high even if the penetration of mobile phones is low. --->Might hinder diffusion since the need for mobile phones is lower if everyone has a fixed line connection. Result: A large fixed network has a positive impact on mobile phone diffusion.
Q:
Network effects are not always strong enough to force standardization. Name & explain three effects limiting the degree of dominance of a single technology.
A:
- Consumer heterogeneity ---> can help niche products survive despite a dominant competitor --> preference for variety - Local network effects ---> Local network effects occur when the utility an agent obtains from choosing a specific product is increasing in the number of agents within his social neighbourhood that choose the same product. --> Overall network size is irrelevant --> e.g. Language - Existence of a sustainable mass of complementary products ---> With indirect network effects, there may exist a critical number beyond which an additional complementary product does not confer any significant additional value. --> e.g. if most users want to play a small selection of games, any system that can provide a sufficient number of such blockbuster games is viable.
Q:
Name 4 logics common in traditional markets, that are not transferable to platform markets.
A:
1.An efficient price structure should be set to reflect relative costs. 2.A high price-cost margin indicates market power. --> no, competition needs to be looked at 3.A price below marginal cost indicates predation. --> low prices can just reflect the value of the other market side.. 4.In mature markets, price structures that do not reflect costs are no longer justified.
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