We study competitive interaction between profit-maximizing firms that sell software and complementary goods or services. In addition to tactical price competition, we allow firms to compete through business model reconfigurations. We consider three business models: the proprietary model (where...

We study whether complementarities can help a firm enter a market with strong network effects and incumbency advantages. We find that bundling the network good with a complementary good, or using the network good as a loss leader (i.e., pricing below marginal cost) can facilitate entry, but that...

We study competitive interactions between Intel and Microsoft, two producers of complementary products. In a system of complements, like the PC, the value of the final product depends on how the different components work together. This, in turn, depends on the firms' investments in complementary...