 Digital platform compatibility strategies in platform co-opetitionHe Liu, Raphael Amit, Han Qiao and Shouyang Wang Journal of Business Research, 2024, vol. 174, issue C Abstract: Many digital platform firms cooperate and compete with rivals simultaneously by offering complementary products of their digital platform to rivals. We develop a game-theoretic model to investigate four profit-maximizing compatibility strategies of digital platform firms: incompatibility (I), one-way compatibility with the superior/inferior product sold on both platforms (OS/OI), and two-way compatibility (T). We make four main findings. First, a large value difference and medium compatibility cost favor the dominance of the OS strategy. Second, at a high royalty rate and low compatibility cost, the T strategy dominates because of the high royalty revenue and sales revenue. Third, when substitutability among the systems or compatibility cost is high, the I strategy dominates. Finally, compatibility generates market expansion. We further extend the model to incorporate the impacts of asymmetric platform ecosystem advantages, asymmetric compatibility costs, and consumers’ platform dependence on the optimal compatibility strategy. Keywords: Digital platform competition; Co-opetition; Compatibility strategy; Asymmetric complementary products; Game theory (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:174:y:2024:i:c:s0148296323008482 DOI: 10.1016/j.jbusres.2023.114489 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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