We consider duopolists innovating and producing a good subject to network externalities, so that the reservation price of a consumer increases with aggregate consumption. The post-innovation network consists of two compatible sub-networks, with increased network valuation of the new product....

The future compatibility of a product can be important to a buyer. With IT products, switching costs may in the worst case well exceed the purchasing price. We develop a model in which rational buyers value products by their expected levels of future compatibility, using suppliers' R&D budget...

Software firms are observed to support programmers' communities, which develop rival open source programs. A firm selling a copyright program has an incentive to support substitute copyleft programming when support creates compatibility between the programs and programs exhibit network effects....