Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2008
  • Working Paper
  • HBS Working Paper Series

Platform Competition, Compatibility, and Social Efficiency

By: Ramon Casadesus-Masanell and Francisco Ruiz-Aliseda
  • Format:Print
  • | Language:English
  • | Pages:54
ShareBar

Abstract

Katz and Shapiro (1985) study systems compatibility in settings with one-sided plat- forms and direct network effects. We consider systems compatibility in settings with two-sided platforms and indirect network effects to develop an explanation why markets with two-sided platforms are often characterized by incompatibility with one dominant player who may subsidize access to one side of the market. We find that incompatibility gives rise to asymmetric equilibria with a dominant platform that earns more than under compatibility. We also find that incompatibility generates larger total welfare than compatibility when horizontal differences between platforms are small.

Keywords

Network Effects; One-Sided Platforms; Two-Sided Platforms; Competition

Citation

Casadesus-Masanell, Ramon, and Francisco Ruiz-Aliseda. "Platform Competition, Compatibility, and Social Efficiency." Harvard Business School Working Paper, No. 09-058, October 2008. (Revised November 2009.)
  • Read Now

About The Author

Ramon Casadesus-Masanell

Strategy
→More Publications

More from the Authors

    • November 2022
    • Faculty Research

    HBS Case Video Bosch eBike

    By: Ramon Casadesus-Masanell
    • November 2022
    • Faculty Research

    What are the lessons learned to make intrapreneurship successful in a large company

    By: Ramon Casadesus-Masanell
    • November 2022
    • Faculty Research

    What are the lessons learned from the e-bike business for other Bosch divisions

    By: Ramon Casadesus-Masanell
More from the Authors
  • HBS Case Video Bosch eBike By: Ramon Casadesus-Masanell
  • What are the lessons learned to make intrapreneurship successful in a large company By: Ramon Casadesus-Masanell
  • What are the lessons learned from the e-bike business for other Bosch divisions By: Ramon Casadesus-Masanell
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College