Economic and Technical Drivers of Technology Choice: Browsers (Working paper: please do not cite without permission from authors) Timothy F. Bresnahan and Pai-Ling Yin First Draft: Nov 05, 2003 Abstract The diffusion of new technologies is their adoption by different economic agents at different times. A classical concern in the diffusion of technologies (Griliches, 1957) is the importance of raw technical progress versus economic forces. We examine this classical issue in the modern market of web browsers. Using a new data source, we study browser brand shares and the diffusion of new browser versions. Features of that market also generate novel questions in the economics of diffusion. We find that browser distribution via the expanding market for a complementary technology, personal computers (PCs), had a larger effect on the rate and direction of technical change than technical browser improvements. Timothy F. Bresnahan Pai-Ling Yin Landau Professor in Technology and the Economy Harvard Business School Stanford University Morgan Hall 241 Department of Economics Soldiers Field 579 Serra St. Boston MA 02163 Stanford, CA, 94305 USA
[email protected] [email protected] 1 1) Introduction A new invention creates a technological opportunity. The diffusion of the new technology to the economic agents who will use it determines the rate and direction of realized technical change in the economy. We have known since the work of Griliches (1957) that both economic and technical forces shape diffusion. Invention is only the beginning of technical progress. Inventors introduce new technologies into the field and start their diffusion. The movement of the overall economy toward realizing a technological opportunity depends on the behavior of the adopters of the technology.