We study the role that switching costs, compatibility, and mergers and acquisitions play in influencing the evolution of a multi-market industry. By looking at the case of the Local Area Networking industry, we propose a ‘history friendly model’ to replicate its evolution during the 1990s. Our model explains how a firm can start from a dominant position in one of the existing markets and exploit switching costs and compatibility to enter a new market. Mergers and acquisitions also play an important role as the new market is pioneered by a start-up, which is soon acquired by the dominant incumbent. As a result of the acquisition, the acquiring firm becomes the leader also in the new market.
CITATION STYLE
Fontana, R., & Zirulia, L. (2015). “… then came cisco, and the rest is history”: A ‘history friendly’ model of the local area networking industry. Journal of Evolutionary Economics, 25(5), 875–899. https://doi.org/10.1007/s00191-015-0422-8
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