Mix and Match: Product Compatibility Without Network Externalities
By C. Matutes, P. Regibeau. 2011
276 citations recorded by the source corpus.
In industries where consumers can assemble their own systems, firms must decide whether to make their components compatible with those of their rivals. We examine a two-stage game in which two fully integrated firms make their compatibility decisions before competing in prices. The symmetric perfect Nash equilibrium of this game is shown to involve full compatibility. Although compatibility leads to higher prices than incompatibility, it also increases the variety of systems available so that some consumers are better off with compatibility, while others are hurt. If standardization is costless, compatibility increases social surplus but may decrease consumer surplus.
Subfields: Management Science and Operations Research, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/9e4ccebc933083f76510a82d4121ab19cef5a8e1
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In Management Science and Operations Research
In Strategy and Management
- Kevin J. Boudreau
- Amrit Tiwana
- Melissa A. Schilling
- Joost Rietveld
- Geoffrey G. Parker
- Marcel Bogers
- Joel West
- Lars Bo Jeppesen
Citations in the corpus
- Open Platform Strategies and Innovation: Granting Access vs. Devolving Control (2010, background): “If opening affected the intensity of inter-system competition (e.g., Matutes and Regibeau 1988; Tag 2008) or if inter-system competition created strategic motivations for opening and closing (e.g., Eisenmann et al. 2009, Nahm 2004), then intersystem competition could lead to spurious correlations…”
- Platform Competition: A Systematic and Interdisciplinary Review of the Literature (2020, unknown): “…returns to adoption, it created strong incentives for producers to adopt standardized interfaces and a modular production system that would enable a wide range of third-party complement developers to create complements for a common platform (e.g., Matutes & Regibeau, 1988; Schilling, 1998, 2000).”