Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/47586 
Year of Publication: 
1999
Series/Report no.: 
Tübinger Diskussionsbeiträge No. 173
Publisher: 
Eberhard Karls Universität Tübingen, Wirtschaftswissenschaftliche Fakultät, Tübingen
Abstract: 
This paper analyzes the interplay between compatibility and product design decisions in a symmetric software duopoly with network effects. We show that suppliers do not always offer differentiated product designs and compete within the market. Rather, when ever both the significance of the network effects and the costs of compatibility are high, they offer homogeneous and incompatible variants and compete for the market, although this leads to Bertrand competition with zero profits. Moreover, we show that given our symmetric setting, antitrust authorities should never intervene against incompatibility, whereas compatibility arrangements should always be under their scrutiny.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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