THE INTERTEMPORAL DEMAND FOR CONSUMER TECHNOLOGIES REQUIRING JOINT HARDWARE AND SOFTWARE INPUTS

In this paper we explore the demand for consumer technologies that involve joint inputs in the generation of the service flow. An intertemporal model is used in the analysis. The impact of hardware and software prices on hardware and software demand as well as the impact of changes in the size of the software catalogue are analysed. The model allows copying and it is shown that the ease of copying has a significant impact on hardware and software demands and that the presence of copying has a significant impact on the reactions of hardware and software purchases to changes in the size of the software catalogue and its intertemporal availability. The role of copying in the competition between technologies is also addressed, and it is shown that the prospect of a copying facility on a forthcoming technology will tend to reduce the demand for a current technology without such a facility and moreover will reduce the demand for software for that technology.