We analyze a model of cost-reducing R&D and compatibility decisions by two platforms. After an exogenous improvement in the efficiency of R&D, each platform has a heightened incentive to make its software incompatible with the rival's hardware device to avoid being dominated in the hardware...

This paper examines the effects of platform most-favored-customer (PMFC) clauses on incentives for platforms to invest in demand-enhancing investments that might involve spillover effects. In a bilateral duopoly model incorporating competition between sellers and between platforms, we show that...

This paper investigates the efficiency of the Japanese distribution system, measured by the distribution margin. Most of the discussions on the Japanese distribution system have so far relied on institutional descriptions and anecdotal evidence, failing to substantiate the case. The present...

This paper analyzes the unilateral choices of application compatibility by platforms and the endogenous affiliations of two different groups (content providers and users). We find a novel result that for both platforms to unilaterally choose application compatibility is not an equilibrium unless...

This paper investigates the efficiency of the Japanese distribution system, measured by the distribution margin. Most of the discussions on the Japanese distribution system have so far relied on institutional descriptions and anecdotal evidence, failing to substantiate the case. The present...

This paper studies firms' incentives for vertical integration and bundled discounts of complementary components. We assume that firms first choose ownership structures and pricing schemes, and then compete on price. We find that vertical integration and mixed bundling is a dominant strategy for...