Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311873 
Year of Publication: 
2022
Citation: 
[Journal:] Networks and Spatial Economics [ISSN:] 1572-9427 [Volume:] 22 [Issue:] 4 [Publisher:] Springer US [Place:] New York, NY [Year:] 2022 [Pages:] 903-913
Publisher: 
Springer US, New York, NY
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 independently 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 - conditions that typically characterize IT markets.
Subjects: 
Network products
Network effects
Compatibility
JEL: 
C72
L13
L15
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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