In a setting with Hotelling differentiation and weak network effects: When the market is already covered, duopoly adoption of compatibility leads to a price increase, can reduce user surplus and thus tends to be welfare-reducing. We show that this welfare result can be reversed if the market is not covered under incompatibility.
On the welfare effects of compatibility with Hotelling competition: the role of market coverage
Bertoletti, P
Primo
In corso di stampa
Abstract
In a setting with Hotelling differentiation and weak network effects: When the market is already covered, duopoly adoption of compatibility leads to a price increase, can reduce user surplus and thus tends to be welfare-reducing. We show that this welfare result can be reversed if the market is not covered under incompatibility.
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Bertoletti-2026-Review of industrial organization-AAM.pdf
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