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Compatibility, interoperability, and market power in upgrade markets

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  • James Anton
  • Gary Biglaiser

Abstract

We 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 Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 19 (2010)
Issue (Month): 4 ()
Pages: 373-385

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Handle: RePEc:taf:ecinnt:v:19:y:2010:i:4:p:373-385

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Related research

Keywords: upgrade markets; compatibility; standards; interoperability; innovation;

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Cited by:
  1. Anton, James J. & Biglaiser, Gary, 2013. "Quality, upgrades and equilibrium in a dynamic monopoly market," Journal of Economic Theory, Elsevier, Elsevier, vol. 148(3), pages 1179-1212.

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