Mix-and-match compatibility in asymmetric system markets

Hahn, J.-H. and Kim, S.-H. (2012) Mix-and-match compatibility in asymmetric system markets. Journal of Institutional and Theoretical Economics JITE, 168 (2). pp. 311-338. ISSN 0932-4569

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Abstract

This paper shows that the private incentive for mix-and-match compatibility in system markets diverges from the social planner's incentive if competing suppliers are asymmetric in production cost or product quality. There can be too much or too little compatibility when the market is served by fully integrated system suppliers. Also, the market outcome involves socially too much incompatibility in the form of exclusive technological alliances when the market is composed of independent component suppliers. These results contrast with the standard one obtained in the symmetric setup and shed new light on public policy towards compatibility, technological alliances, and bundling practices in system markets.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
Related URLs:
Depositing User: Pure Connector
Date Deposited: 22 Nov 2013 14:20
Last Modified: 21 Apr 2020 22:11
URI: https://ueaeprints.uea.ac.uk/id/eprint/44408
DOI: 10.1628/093245612800933997

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