 Platform Competition with “Must-Have” ComponentsChristiaan Hogendorn () and Ka Yuen No 2004-003, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics Abstract: In platform-component systems with indirect network effects, some components are so popular with consumers that they have strong bargaining positions and can be regarded as “must-have” from the point of view of the platform. For example, ESPN is a must-have component of cable TV platforms. This paper presents a theoretical model to assess how platform market structures affect the likelihood of exclusive versus non-exclusive contracts between platforms and components. The model evaluates the combined impacts of (i) the popularity of the component, (ii) the platform market share difference and (iii) platform technological compatibility on the platform-component contractual arrangements. It shows that a component provider is more likely to sign exclusive access contracts with a single platform if its popularity is high, the platform market share difference is large, and platform compatibility is low. Keywords: network effects; bargaining; platforms (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:wes:weswpa:2004-003 Access Statistics for this paper More papers in Wesleyan Economics Working Papers from Wesleyan University, Department of Economics Contact information at EDIRC. |
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