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Wintel: Cooperation or Conflict

By: Ramon Casadesus-Masanell and David B. Yoffie
  • Format:Print
  • | Language:English
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Abstract

We study the incentives of complementors (producers of complementary products) to cooperate vs. compete and how these interact. In a system of complements, like the PC, the value of the final product depends on how well the different components work together. This, in turn, depends on the firms' investment in complementary R&D. We ask whether profit maximizing complementors will fully cooperate to make the final product as valuable as possible. Contrary to the popular view that two tight complements will generally have well aligned incentives, we demonstrate that natural conflicts emerge over pricing, the timing of investments, and who captures the greatest value at different phases of product generations.

Keywords

Investment; Price; Time Management; Product; Product Development; Research and Development; Conflict and Resolution; Motivation and Incentives; Value

Citation

Casadesus-Masanell, Ramon, and David B. Yoffie. "Wintel: Cooperation or Conflict." Harvard Business School Working Paper, No. 05-083, July 2005.

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