The incorporation of digital technologies into the products of diverse industries, accompaniedby a shift to von-Neumann-like platform architectures, while resulting in substantially more valuableand flexible products, also leads to increased substitutability across previously distinct markets. This paperanalyzes the economic implications of this trade-off in technology markets subject to digital convergence.We present a new model of imperfect competition that captures flexible platform scope, variability in consumerrequirements, and multiple product purchases. We specify four types of equilibrium configurations- local monopoly, kinked, competitive and non-exclusive - that emerge as outcomes of the model, anddescribe how each equilibrium structure characterizes a distinct stage of digital convergence.Our analysis establishes that as markets converge, prices always rise initially even as competing productsbecome less differentiated. However, when platform scope is largely dictated by exogenous factors, pricesand profits eventually fall as the stage of convergence progresses, though consumer surplus and totalsurplus rise. Furthermore, while convergence has the expected effect of shifting consumption patternsfrom purchasing multiple specialized products to buying a single general-purpose product, we describeexamples of equilibria in which consumers may buy multiple general-purpose products, using each fora specialized subset of their requirements. Pricing responses to changes in variable costs and consumerfunctionality needs are also discussed.When firms can make strategic choices of platform scope, we show that in any subgame perfect equilibrium,duopoly prices are always higher than monopoly prices, and industries may sustain high levels ofprofitability even when their boundaries blur. We also establish that as technological progress lowers fixedcosts, a natural outcome is for unregulated firms to over-invest in platform scope relative to the socialoptimum, and that this outcome is true under both monopoly and duopoly market structures.

This paper studies competition in the presence of digital convergence, a phenomenon that has been observed in a variety of information technology industries: handheld computing, telecommunications, consumer electronics, networking, residential broadband and broadcast video, among others. Digital convergence increases the value and flexibility of products and services, but also increases the substitutability of products that were previously in distinct industries, therefore presenting a critical trade-off for managers making technological and platform scope choices. We analyze this trade-off between product value and product substitutability by developing a new model of competition in converging industries that generalizes popular models of imperfect competition, admitting endogenous product scope choices, variable substitutability across products and industry boundaries, and purchases of multiple technology products by individual consumers. We establish four different kinds of equilibria, which characterize distinct stages of digital convergence. Our results show that early stages of convergence feature increasing prices and profitability, which eventually fall if the extent of convergence progresses beyond a critical point. However, if firms can bilaterally and strategically control the degree of convergence in their industries, their equilibrium strategies can sustain higher prices and profits even when industry boundaries blur. We also describe examples of equilibria in which consumers may buy multiple general-purpose products, using each for a specialized subset of their needs, and discuss how this may lead to cyclical demand trends between specialized and general-purpose digital products. The effect of technological changes that alter the fixed costs of expanding product scope, the variable costs of production, and the breadth of customer requirements are analyzed. Managerial guidelines based on each of our results are presented.

interfirm alliances.

"This book addresses and positions the issues in business strategy and public policy rising from digital convergence, especially in the areas of mobile communications, broadband networks, and digital multimedia broadcast services. It presents new business opportunities generated by digital convergence, and raises governance issues in digital convergence"--Provided by publisher.

This book, which analyzes the internal and external environment of the media industry, compiles scientific articles, written by 33 authors coming from 13 diverse countries, emphasizing the complex and multifaceted nature of the industry, of the business and of the media economy. The authors got more than 130 detailed definitions of relevant concepts from the business and media technology area, having quoted in their articles more than 720 books, monographs, articles and research papers. This work intends, on one hand, to emphasize the necessity from the companies and the media consumers side, to define strategies that allow to give an answer to the appearing of the new media. On the other hand, it intends to adopt and adapt relevant business frames and concepts for the economic and technological analysis of media markets.

The US in general and Central Texas in particular face a daunting challenge: our capacity to sustain the creation and growth of businesses and jobs is being undermined. The emergence of global competitors' greater cost efficiencies, productivity, and technological sophistication greatly challenge our economic future. If Central Texas can embrace these changes by creating an environment which supports rather than retards the process of change, we will create a powerful motor for job creation and growth, which in turn will increase consumer choice and promote cultural diversity. If Central Texas fails to do so, or fails to do so rapidly enough, there are real risks that our businesses and citizens will be sidelined by the digital convergence revolution being embraced by businesses, users and governments around the world. Digital convergence is a process that is expected to provide a level of competitive advantage and wealth creation to nations, regions, industries, and companies, surpassing that created in the past by the emergence of the automotive, aerospace, and semiconductor industries.