Competition between Vertically Differentiated Platforms
Competition between Vertically Differentiated Platforms
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DOI:
10.1007/s10842-016-0223-2
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发表时间:
2016-03
期刊:
影响因子:
--
通讯作者:
Yusuke Zennyo
中科院分区:
文献类型:
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作者:
Yusuke Zennyo
This paper investigates the competition between vertically differentiated platforms in two-sided markets. We assume the presence of two competing platforms producing either higher- or lower-quality devices for consumers. Each platform decides the price of its hardware device for consumers and the royalty rate for software developers. We find that, despite the existence of quality differences, the decisions by the platforms about royalty rates are symmetric and only hardware pricing is asymmetric. We also demonstrate that an equilibrium may exist in which a lower-quality platform can enjoy greater profit than a higher-quality rival when there are higher development costs associated with creating software to meet the needs of higher-quality devices.