Compatibility and the Product Life Cycle in Two-Sided Markets
Compatibility and the Product Life Cycle in Two-Sided Markets
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DOI:
10.1515/rne-2013-0011
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发表时间:
2013
期刊:
影响因子:
--
通讯作者:
M. Maruyama;Yusuke Zennyo
中科院分区:
文献类型:
--
作者:
M. Maruyama;Yusuke Zennyo
Abstract We consider a case in which two competing suppliers of hardware devices and content each chooses whether to make its content compatible with the other’s device. Our main result is that the outcome of these choices depends upon whether the firms’ major source of profit lies in the sale of hardware devices or in royalties from the sale of content. If the hardware is the main source of profit then incompatibility is a dominant strategy. If royalties are the main source of profit then compatibility is the dominant strategy. Which of these situations attains is likely to change over the product life cycle. We add to the literature by showing the equilibrium structure of compatibility in a two-sided market.