PLATFORM COMPETITION WITH 'MUST-HAVE' COMPONENTS -super-*

Christiaan Hogendorn () and Stephen Ka Yat Yuen

Journal of Industrial Economics, 2009, vol. 57, issue 2, pages 294-318

Abstract: In platform-component systems with indirect network effects, some 'must-have' components are so popular with consumers that they create large, discrete indirect network effects when they become available on a platform. For example, ESPN is a must-have component of cable TV platforms. This paper examines how platform market structures determine exclusive versus non-exclusive contracts between platforms and components. It shows that a component provider is more likely to sign exclusive contracts with a single platform if its popularity is high, the platform market share difference is large, and cross-platform indirect network effects are low. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

Date: 2009

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Journal of Industrial Economics is edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

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