Working Paper: NBER ID: w17246
Authors: Catherine Tucker
Abstract: This paper investigates how the destabilizing of a social network may increase the scope of network externalities, using data on sales of a video-calling system made to an investment bank's employees and subsequent usage by these customers. The terrorist attacks of 2001 led potential customers in New York to start communicating with a new and less predictable set of people when their work teams were reorganized as a result of the physical displacement that resulted from the attacks. This did not happen in other comparable cities. These destabilized communication patterns were associated with potential adopters in New York being more likely to take into account a wider spectrum of the user base when deciding whether to adopt relative to those in other cities. Empirical analysis suggests that the aggregate effect of network externalities on adoption was doubled by this instability.
Keywords: network externalities; technology adoption; social networks; instability
JEL Codes: L0; L86; L96
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Destabilization of communication patterns in New York due to the September 11 attacks (L96) | potential adopters being more likely to consider a broader user base when deciding to adopt technology (D16) |
| Destabilization of communication patterns in New York due to the September 11 attacks (L96) | aggregate effect of network externalities on adoption (D85) |
| Changes in communication patterns (L96) | responsiveness of New York employees to adoption by a wider circle of acquaintances (J29) |
| Network externalities become less localized (F69) | adoption decision becomes more responsive to a broader set of adoption behaviors (D91) |
| September 11 attacks (F52) | changes in technology adoption behavior (O33) |