English, Article, Journal or magazine article edition: Compatibility Choice in vertically differentiated technologies Filomena, GARCIA; Cecilia, VERGARI

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Bookmark: http://trove.nla.gov.au/version/177838
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Compatibility Choice in vertically differentiated technologies
Author
  • Filomena, GARCIA
  • Cecilia, VERGARI
Physical Description
  • preprint
Notes
  • We analyse firmsÕ incentives to provide two-way compatibility between two network goods with different intrinsic qualities. We study how the relative importance of vertical differentiation with respect to the network effect influences the price competition as well as the compatibility choice. The final degree of compatibility allows firms to manipulate the overall differentiation. Under weak network effect, full compatibility may arise : the low quality firm has higher incentives to offer it in order to prevent the rival from dominating the market. Under strong network effect we observe multiple equilibria for consumersÕ demand. However, in any equilibrium of the full game, coordination takes place on the high quality good which, we assume, always maintains its overall quality dominance.
  • compatibility, vertical differentiation, network effect
  • RePEc:ctl:louvec:2008012
Language
  • English
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