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Compatibility Choices, Switching Costs and Data Portability: On the Role of the Non-Negative Pricing Constraint

Jeon, Doh-Shin, Menicucci, Domenico and Nasr, Nikrooz (2016) Compatibility Choices, Switching Costs and Data Portability: On the Role of the Non-Negative Pricing Constraint. TSE Working Paper, n. 16-691

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Official URL : http://tse-fr.eu/pub/30706

Abstract

We study mix-and-match compatibility choices of firms selling complementary products in a dynamic setting. In contrast to what happens in a static setting where symmetric firms choose compatibility (Matutes and Régibeau, 1988), when consumers face significant switching costs and firms can poach them by making behavior-based price discrimination, symmetric firms choose incompatibility to soften future competition. Even if this tends to
harm consumers, incompatibility can increase welfare by reducing excessive switching. Data portability, by reducing switching costs, induces the firms to choose compatibility more often but, given a compatibility regime, benefits consumers only if the non-negative pricing constraint binds.

Item Type: Monograph (Working Paper)
Language: English
Date: September 2016
Uncontrolled Keywords: Compatibility, Switching Cost, Data Portability
JEL Classification: D43 - Oligopoly and Other Forms of Market Imperfection
L13 - Oligopoly and Other Imperfect Markets
L41 - Monopolization; Horizontal Anticompetitive Practices
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse Capitole
Site: UT1
Date Deposited: 06 Sep 2016 08:15
Last Modified: 02 Apr 2021 15:54
OAI Identifier: oai:tse-fr.eu:30706
URI: http://publications.ut-capitole.fr/id/eprint/22344

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