Physical telecom networks are costly and few, traditionally to the point of monopoly. Innovation thrives with many … service innovation efficiently. But this incentive breaks down ex post as M can extract an independent J's quasi …) purports to get the best of both worlds (BoBW). But it seems so hard to implement in innovation markets that one might construe …

We consider innovation incentives in markets where final goods comprise two strictly complementary components, one of … innovation is important. We explore ways in which the monopoly may have incentives to confiscate efficiency rents in the … competitive sector, thus weakening or destroying incentives for independent innovation. We discuss how these problems are affected …