*We would like to thank Gil Skillman, the Editor and an anonymous referee for very helpful comments. We also thank the organizers and participants of the ‘Competition Policy in Two-Sided Markets’ Conference, June 29 - July 1, 2006, Toulouse.
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PLATFORM COMPETITION WITH ‘MUST-HAVE’ COMPONENTS†
Article first published online: 19 MAY 2009
DOI: 10.1111/j.1467-6451.2009.00379.x
© 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics
Additional Information
How to Cite
HOGENDORN, C. and KA YAT YUEN, S. (2009), PLATFORM COMPETITION WITH ‘MUST-HAVE’ COMPONENTS. The Journal of Industrial Economics, 57: 294–318. doi: 10.1111/j.1467-6451.2009.00379.x
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Publication History
- Issue published online: 19 MAY 2009
- Article first published online: 19 MAY 2009
- Abstract
- Article
- References
- Cited By
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.