Sociotechnical constituencies, game theory, and the diffusion of compact discs
This article has been motivated by the inquiry of the National Heritage Committee of the British House of Commons into the price of compact discs in 1993. Its general thrust is to foster the dialogue between sociological approaches to the study of innovation and microeconomic theory. To do this, it presents a comprehensive case study of technological innovation in the market for recorded music in Britain. The material is analysed with aid of the ’sociotechnical constituencies’ approach recently proposed in this journal by Alfonso Molina, followed by a game theoretical analysis of competitive alignment between the dominant constituents. Using this interdisciplinary approach, the article argues that technological innovation may induce price rigidities by allowing the establishing of focal points for tacit collusion. The innovation of compact discs enabled the major record companies to redefine the overall price level to their advantage, after the industry had undergone a period of profit-squeezing price-competition. This has the important policy implication that radical product innovation may call for regulative changes in the techno-institutional structure of the market.
Preprint: 1997-Klaes-ResPol-preprint.pdf
Bibliographical details of final and authoritative version:
Klaes, M. 1997. Sociotechnical constituencies, game theory, and the diffusion of compact discs: An inter-disciplinary investigation into the market for recorded music. Research Policy 25(8):1221-34.
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