Niedermayer, Andras (December 2006). Does a Platform Monopolist Want Competition? (Discussion Papers 06-04). Bern: Department of Economics
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We consider a software vendor first selling a monopoly platform and then an application
running on this platform. He may face competition by an entrant in the applications market. The platform monopolist can benefit from competition for three reasons. First, his profits from the platform increase. Second, competition serves as a credible commitment to lower prices for applications. Third, higher expected product diversity may lead to higher demand for his application. Results carry over to non-software platforms and, partially, to upstream and downstream firms. The model also explains why Microsoft Office is priced significantly higher than Microsoft’s operating system.
Item Type: |
Working Paper |
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Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
Series: |
Discussion Papers |
Publisher: |
Department of Economics |
Language: |
English |
Submitter: |
Lars Tschannen |
Date Deposited: |
02 Oct 2020 07:50 |
Last Modified: |
15 Mar 2021 08:19 |
JEL Classification: |
D41, D43, L13, L86 |
BORIS DOI: |
10.7892/boris.145687 |
URI: |
https://boris.unibe.ch/id/eprint/145687 |
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