Content provision and compatibility in a platform market : Comment

An article in the Economics Letters by Alexander Rasch and Tobias Wenzel (2014, hereafter RW) states that “...Content providers can reach all users via either platform. Hence, as there is no differentiation among platforms from the developers’ point of view, platforms face Bertrand competition. As a result, the license fee is competed to zero: , The equilibrium amount of content is then and equilibrium platform profits are - F . ” Our research finds that this statement has a fatal flaw