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...

Versioning literature recommends that a software firm should always sell only one version of a product with the highest quality unless other factors such as piracy, network externality, or concave cost of producing quality are present. However, software firms universally adopt versioning...