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Vaporware as a Means of Entry Deterrence

2003; Wiley; Volume: 51; Issue: 3 Linguagem: Inglês

10.1111/1467-6451.00204

1467-6451

Marco Haan,

Digital Platforms and Economics

Firms in the computer industry are often accused of vaporware, the untruthful pre‐announcement of a new version of their product. By claiming they have a new product, critics argue, these firms try to deter potential entrants. The paper analyzes this phenomenon. It shows that vaporware is an equilibrium strategy in a signaling game in which the possibility to market a new product is private information. In this model, the possibility of vaporware can hurt consumers, also in the case the incumbent does have a new version of its product. The welfare effects of vaporware are ambiguous.