Compatibility, interoperability, and market power in upgrade markets
AbstractWe examine the market power of a seller who repeatedly offers upgraded versions of a product. In the case of pure monopoly, the seller also controls compatibility across versions. In the case of an entrant who offers an upgrade, the incumbent seller also controls subsequent interoperability across versions. We argue that control of compatibility and interoperability does not allow an incumbent seller to charge a price premium relative to when such control is absent and, consequently, neither is a necessary source of market power.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.
Volume (Year): 19 (2010)
Issue (Month): 4 ()
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Other versions of this item:
- James J. Anton & Gary Biglaiser, 2010. "Compatibility, Interoperability, and Market Power in Upgrade Markets," Working Papers 10-31, Duke University, Department of Economics.
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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- Anton, James J. & Biglaiser, Gary, 2013. "Quality, upgrades and equilibrium in a dynamic monopoly market," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1179-1212.
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