Optimal compatibility in systems markets

• 成果类型: Article
• 署名作者: Kim, Sang-Hyun; Choi, Jay Pil
• 署名单位: University of East Anglia; University of East Anglia; UK Research & Innovation (UKRI); Economic & Social Research Council (ESRC); Michigan State University; Yonsei University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2015.02.005
• 发表日期: 2015
• 页码: 106-118
• 关键词: compatibility; System competition; standardization; Spatial competition model

摘要

We investigate private and social incentives for standardization to ensure market-wide system compatibility in a two-dimensional spatial competition model. We develop a new methodology to analyze competition on a torus and show that there is a fundamental conflict of interests between consumers and producers over the standardization decision. Consumers prefer standardization with full compatibility because it offers more variety that confers a better match with their ideal specifications. However, firms are likely to choose the minimal compatibility to maximize product differentiation and soften competition. This is in sharp contrast to the previous literature that shows the alignment of private and social incentives for compatibility. (C) 2015 Elsevier Inc. All rights reserved.