COMPATIBILITY INCENTIVES OF A LARGE NETWORK FACING MULTIPLE RIVALS -super-*
Abstract
Under network effects, we analyze when a firm with the largest market share of installed-base customers prefers incompatibility with smaller rivals that are themselves compatible. With incompatibility, consumers realize that intra-network competition makes the rivals' network more aggressive than a single-firm network in adding customers. Consequently, under incompatibility the unique equilibrium can entail tipping away from the largest firm whatever its market share. The largest firm is more likely to prefer incompatibility as its share rises (above fifty per cent is necessary) or the potential to add consumers falls; the number of rivals and strength of network effects have ambiguous implications. Copyright Blackwell Publishing Ltd. 2006.Download Info
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Bibliographic Info
Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.
Volume (Year): 54 (2006)
Issue (Month): 4 (December)
Pages: 527-567
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- María Fernanda Viecens, 2009. "Compatibility with Firm Dominance," Working Papers 2009-12, FEDEA.
- Sjaak Hurkens & Ángel L. López, 2010.
"Mobile Termination, Network Externalities, and Consumer Expectations,"
UFAE and IAE Working Papers
812.10, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Hurkens, Sjaak & Lopez, Angel, 2010. "Mobile termination, network externalities, and consumer expectations," IESE Research Papers D/850, IESE Business School.
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