Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237732 
Year of Publication: 
2021
Series/Report no.: 
University of Tübingen Working Papers in Business and Economics No. 150
Publisher: 
University of Tübingen, Faculty of Economics and Social Sciences, Tübingen
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.
Subjects: 
Compatibility
Network Products
Network Effects
JEL: 
C72
L13
L15
Document Type: 
Working Paper

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