On the welfare effects of compatibility with Hotelling competition

Paolo Bertoletti

No 560, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: In a setting with Hotelling differentiation and (weak) network effects, when the market is already covered duopoly adoption of compatibility leads to anti-competitive effects and tends to be welfare excessive. We show that the latter result is reversed if the market is not assumed to be covered even under incompatibility (a condition which depends on the value of the intrinsic/stand-alone beneÂ…ts).

Keywords: Compatibility; Network e¤ects; Hotelling differentiation (search for similar items in EconPapers)
JEL-codes: D43 L15 L22 (search for similar items in EconPapers)
Pages: 7
Date: 2025-10
New Economics Papers: this item is included in nep-com, nep-ind, nep-inv and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:560

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