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Title: Multihoming and compatibility
Authors: Doganoglu, T.
Wright, J. 
Keywords: Compatibility
Network effects
Two-sided markets
Issue Date: 2006
Citation: Doganoglu, T., Wright, J. (2006). Multihoming and compatibility. International Journal of Industrial Organization 24 (1) : 45-67. ScholarBank@NUS Repository.
Abstract: When competing firms make their services compatible, consumers enjoy greater network benefits. These benefits can also be realized if firms remain incompatible and consumers multihome by purchasing from each of the firms. We find that such multihoming may be a poor substitute for compatibility. Multihoming weakens competition and introduces costs that firms do not internalize. As a result, multihoming can increase the social desirability of compatibility, while making compatibility less attractive for firms. Surprisingly, policymakers should generally be more concerned about the lack of compatibility when multihoming is present. Our results extend to two-sided markets. © 2005 Elsevier B.V. All rights reserved.
Source Title: International Journal of Industrial Organization
ISSN: 01677187
DOI: 10.1016/j.ijindorg.2005.07.004
Appears in Collections:Staff Publications

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