The Growth of Network Computing: Quality‐Adjusted Price Changes for Network Servers

Reenen, John Van

doi:10.1111/j.1468-0297.2006.01063.x

Cited by 7 publications

(9 citation statements)

References 16 publications

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“…The first column reports a regression of the quantity of Microsoft server operating systems sold against non-Microsoft server quality (as proxied by server memory 43 ), a time trend and a seasonal dummy for the winter quarter. 44 Microsoft server quality, PC quality 45 , Microsoft server operating system prices and the PC Windows operating system price (see equation 42). The signs of the coefficient is in line with expectations: non-Microsoft server quality is negatively and significantly correlated with Microsoft sales.…”

Section: F Ementioning

confidence: 99%

Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets

Genakos

Kühn

2011

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When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/ interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by "restoring" second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft's strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century.

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Section: F Ementioning

confidence: 99%

Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets

Genakos

Kühn

2011

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“…John Van Reenen analyses a specific example of changing markets as a result of IT and his focus in ‘The Growth of Network Computing: Quality‐adjusted Prices for Network Servers’ is especially on quality‐adjusted prices in the network server market (Van Reenen, 2006). Since the late 1980s computing architecture went through a paradigm shift, in which mainframe‐orientated systems were replaced by PC client/server architecture as briefly summarised above.…”

Section: Network and Industry Dynamicsmentioning

confidence: 99%

Feature: It Diffusion and Industry and Labour‐Market Dynamics

Weel

2006

The Economic Journal

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The emergence and rapid diffusion of information and communication technology is the most radical technological transformation of the last couple of decades and has had an enormous economic impact. This bundle of four articles contains research that discusses major economic implications of the diffusion of IT. They focus on two main implications of IT: (i) networks and industry dynamics, and (ii) IT and workplace organisation. The two sets of two articles contribute both original theoretical insights and new empirical results to these themes.The adoption and rapid diffusion of the bundle of new information and communication technologies has been the most radical technological change of recent decades. Economists have been focussing on the economic consequences for education, wages, workplace organisation, markets and competition, and networks and innovation of this technological revolution for quite some time now. The four contributions cover core issues of networks and industry dynamics, and workplace organisation and the demand for labour in relation to the IT revolution.The IT revolution has caused the costs of many kinds of interactions to drop by making a great many processes operate more efficiently and it has allowed the opportunity to engage in new interactions that have become cost effective. At first, revolutionary technologies are implemented in a rather mechanical way to make it less costly to produce the same level of output. The main reason for Charles Babbage to manufacture and use a ÔcomputerÕ was to deal more accurately and efficiently with information (Babbage, 1832). 1 Such Ônumber crunchersÕ were the main appearance of computers until the late 1960s mainly used to carry out mathematical and statistical procedures, mass-integrated data processing and simulations of Bayesian decision-making. 2 Over time, a revolutionary technology changes and amends (in an endogenous or co-invention manner) to do entirely new things, such as to change the way in which markets * This Feature is a selection of contributions to the 3-4 June 2004 MERIT Workshop on ÔInformation

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“…The results in Van Reenen (2006) are also relevant at another level. Network server prices were dispersed, suggesting that there were informational frictions in the market for network servers.…”

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confidence: 91%

“…This includes products in markets that have not seen a recent major entry of new producers with superior production technology, and that have not been subject to recent dramatic productivity improvements, see, e.g., Bakos (2001) and a recent survey in The Economist (2004). The empirical study by Van Reenen (2006) in this Feature is particularly relevant. He studies the movement of prices of network servers since 1996 and finds dramatic quality‐adjusted price decreases.…”

mentioning

confidence: 99%

“…In the service sectors that are considered, basically all sector‐level productivity growth comes from entry (of high‐productivity establishments) and exit (of low‐productivity establishments). Van Reenen (2006) shows that recent quality‐adjusted price decreases in the network server market are to a substantial extent due to market exit of the least advanced products.…”

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confidence: 99%

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Revolutionary Effects of New Information Technologies

Berg

2006

The Economic Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Revolutionary Effects of New Information TechnologiesGerard J. van den Berg The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ABSTRACT Revolutionary Effects of New Information Technologies *In markets with imperfect information and heterogeneity, the information technology affects the rate at which agents meet, which in turn affects the distribution of production technologies across firms. We show that in models for such markets there are typically multiple equilibria because reservation utility levels and the lowest production technology in use affect each other. The adoption of novel information technologies may then entail a revolution in the sense of a move from an inefficient to an efficient equilibrium. Inefficient production technologies are removed even in sectors where the new information technology has only recently been introduced. The effect is much larger than a marginal comparative-statics effect on a given equilibrium. The results apply to markets for consumer products, labor, intermediate goods, and (public) institutional services.JEL Classification: D43, D83, L11, L15, O33, J42, L86

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The Growth of Network Computing: Quality‐Adjusted Price Changes for Network Servers

Cited by 7 publications

References 16 publications

Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets

Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets

Feature: It Diffusion and Industry and Labour‐Market Dynamics

Revolutionary Effects of New Information Technologies

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