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...

It is well known that existence of monopoly is accompanied by economic inefficiency in the form of dead weight loss and reduced consumer surplus. The consumer surplus that exists in case of perfect competition gets reduced in case of monopoly; as a part of it goes to the monopolist in the form...