Essays on technology markets

This dissertation consists of two essays, each of which provides preliminary answers to different problems faced by firms. The first essay (Chapter 2) considers whether it is necessary for a firm to be first to enter a new market to attain market leadership and under what conditions it can attain market leadership if it fails to be the first mover. The second essay (Chapter 3) considers how buyers should structure their compensation schemes for reverse auction market makers, such that the buyer lowers its overall cost of procurement. The following abstracts provide additional detail about the two essays.; Abstract of Essay I: Determinants of market leadership in competition between standards: The roles of network externalities, switching costs, and customer preferences. Casual observation of the market outcomes of competition between standards in high-technology markets suggests that the first standard to enter the marketplace does not always win. Sometimes it loses and exits the marketplace; sometimes it survives as a follower in the marketplace. A natural question to ask therefore is: What factors determine which standard wins in the marketplace? How do these factors interact with one another? The present research answers these questions by modeling the competition between two standards, one of which enters the marketplace first. We model what we believe to be the key drivers of high-technology markets, namely, network externalities, customers' preferences for competing standards, and the level of switching costs that customers face.; Abstract of Essay II: Incentive-compatible compensation schemes for reverse auction market makers. We investigate the nature of the incentive-compatible compensation scheme that a buyer must offer to a market maker when the buyer plans to hold an online reverse auction. When the buyer requires that the market maker qualify suppliers on its behalf and when the market maker's effort is unobservable, the buyer faces a moral hazard problem. This problem arises because the market maker may shirk its responsibility by failing to exert any effort to qualify suppliers rigorously. Structuring appropriate compensation schemes represents one way to solve the moral hazard problem. We therefore use principal-agent and auction theory to build a model to investigate how to structure compensation schemes to solve the moral hazard problem. (Abstract shortened by UMI.)...