A duopoly Logit model with price competition and strategic compatibility

Jonard, Nicolas and Schenk, Eric (1999). A duopoly Logit model with price competition and strategic compatibility. UNU-MERIT Research Memoranda. UNU-MERIT.

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  • Sub-type Working paper
    Author Jonard, Nicolas
    Schenk, Eric
    Title A duopoly Logit model with price competition and strategic compatibility
    Series Title UNU-MERIT Research Memoranda
    Volume/Issue No. 11
    Publication Date 1999
    Publisher UNU-MERIT
    Language eng
    Abstract This paper provides an analysis of compatibility decisions with oligopolistic price setting in a duopoly logit model. We consider a sequential game in which firms first choose whether they supply compatible products and then set the price which is charged. The equilibrium compatibility configuration is the outcome of a trade-off between consumers valuation of compatibility and the loss of product differentiation which is associated with compatibility. Finally, it is shown that firms incentives towards compatibility tend to be socially insufficient.
    Copyright Year 1999
    Copyright type All rights reserved
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