This paper examines a two-period duopoly where consumers are locked-in by switching costs that they face in the second period. The paper's main focus is on the question of how the consumer lock-in affects the firms' choice of product durability. We show that firms may face a prisoners' dilemma...

The model analyzes the competition between two firms when their incompatible technologies exhibit network effects in that high expected sales increase the willingness to pay for the corresponding good. An incumbent firm faces the strategic choice of whether to share its superior technology (via...