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 InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 10-31.
Date of creation: 2010
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Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
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Web page: http://econ.duke.edu/
Upgrade markets; Compatibility; Standards; Interoperability; Innovation;
Other versions of this item:
- James Anton & Gary Biglaiser, 2010. "Compatibility, interoperability, and market power in upgrade markets," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(4), pages 373-385.
- 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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