Open Standard Compatibility: Network Externalities versus Product Differentiation∗
نویسندگان
چکیده
We study firms compatibility decisions in a horizontal differentiation model with network externalities. By means of a nested multinomial logit demand structure, we describe the trade-off between network externalities and product differentiation. Simple and general results are derived, which hold for any finite number of firms and which account for any functional form of the externality function. Some insights into the influence of installed bases on the evolution of compatibility decisions are also given.
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