Frenemies in Platform Markets: Heterogeneous Profit Foci as Drivers of Compatibility Decisions

• 成果类型: Article
• 署名作者: Adner, Ron; Chen, Jianqing; Zhu, Feng
• 署名单位: Dartmouth College; University of Texas System; University of Texas Dallas; Harvard University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3327
• 发表日期: 2020
• 页码: 2432-2451
• 关键词: frenemies; compatibility; platform competition; profit foci

摘要

We study compatibility decisions of two competing platform owners that generate profits through both hardware sales and royalties from content sales. We consider a game-theoretic model in which two platforms offer different standalone utilities to users. We find that incentives to establish one-way compatibility-the platform owner with smaller standalone value grants access to its proprietary content application to users of the competing platform-can arise from the difference in their profit foci. As the difference in the standalone utilities increases, royalties from content sales become less important to the platform owner with greater standalone value, but more important to the other platform owner. One-way compatibility can thus increase asymmetry between the platform owners' profit foci and, given a sufficiently large difference in the standalone utilities, yields greater profits for both platform owners. We further show that social welfare is greater under one-way compatibility than under incompatibility. We also investigate how factors such as exclusive content and hardware-only adopters affect compatibility incentives.