Competing Technologies, International Diffusion and the Rate of Convergence to a Stable Market Structure

This paper is motivated by two 'stylized facts' concerning the dynamics of diffusion of diffrent technologies competing for the same market niche. a) A stable pattern of market sharing with no overwhelming dominant position is rarely observed in markets with network esternalities. Unbounded increasing returns to adoption are often called for an explanation of this fact. However the argument is generally based on an incorrect interpretation of the popular Brian Arthur (1989) model. As we show with a simple counterexample unbounded increasing returns are neither necessary nor sufficient to lead to technological monopolies even in a stable external environment. b) International diffusion may lead sometimes to different standards in different countries (the archetypical case is the diffusion of typewriter-computer keyboards - AZERTY vs. QWERTY) or to the diffusion of the same standard in every country (the archetypical example being VCRs - Beta vs. VHS), even without intervention of any regulatory..