Consider an industry in which network goods are supplied by two horizontally differentiated firms facing the threat of a potential entrant. Firms' dilemma is between occupying the product space by selling very differentiated (incompatible) goods, and supplying compatible goods that offer higher...

Consider an industry in which network goods are supplied by two horizontally differentiated firms facing the threat of a potential entrant. Firms' dilemma is between occupying the product space by selling very differentiated (incompatible) goods, and supplying compatible goods that offer higher...

This paper provides an analysis of compatibility decisions with oligopolistic price setting in a duopoly logit model. We consider a sequential game in which firms first choose whether they supply compatible products and then set the price which is charged. The equilibrium compatibility...