Both Both sta Again, fear of being incompatible can itching with the o o the new ead to the inferior Nash Equilibriu techno Is a ne yis a supenor possible th ere is cess mome Nash ash ongly switchl s to the New Technolo Equilib Librium Firm 2 m Excess Mohrentunm Old New ○ Technolog| Technolog old echnolog °(6,7) (2,2)○ irm 1 ew (1,5) 5,4) Technolog12 Technical Compatibility 2 Firm 1 Old Technolog y Old Technolog y New Technolog y (6,7) (2, 2) (1, 5) In the case of excess inertia, each firm wants to adopt the same technology as its rival but, fearful that the rival won’t switch to the new technology, each wrongly stays with the old New Technolog y Firm 2 (5,4) Excess Momentum It is also possible that there is Excess Momentum and each wrongly switches to the New Technology Both switching to the new technolog y is a Nash Equilibriu m Both staying with the old technology is a superior Nash Equilibrium Again, fear of being incompatible can lead to the inferior Nash Equilibrium