The Perpetual Trouble with Network Products - Why IT Firms Choose Partial Compatibility

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Zitierfähiger Link (URI): http://hdl.handle.net/10900/117858
http://nbn-resolving.de/urn:nbn:de:bsz:21-dspace-1178581
http://dx.doi.org/10.15496/publikation-59233
Dokumentart: Wissenschaftlicher Artikel
Erscheinungsdatum: 2021-08-05
Originalveröffentlichung: University of Tübingen Working Papers in Business and Economics ; No. 150
Sprache: Englisch
Fakultät: 6 Wirtschafts- und Sozialwissenschaftliche Fakultät
Fachbereich: Wirtschaftswissenschaften
DDC-Klassifikation: 330 - Wirtschaft
Schlagworte: Economics
Freie Schlagwörter:
Compatibility
Network Products
Network Effects
Lizenz: http://tobias-lib.uni-tuebingen.de/doku/lic_ohne_pod.php?la=de http://tobias-lib.uni-tuebingen.de/doku/lic_ohne_pod.php?la=en
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Abstract:

Compatibility of network products is an important issue in markets for communication technology as well as hard- and software products. Empirical findings suggest that firms competing in these markets typically choose intermediate degrees of product compatibility. We present a strategic two-stage game of two firms deciding strategically or commonly on the degree of product compatibility in the first stage and on prices in the second stage. Indeed, partial compatibility constitutes a subgame perfect Nash equilibrium when coordination costs of standardization are high and the installed bases are low.

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