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Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets / Christos Genakos, Kai-Uwe Kühn, John Van Reenen.
- Format:
- Book
- Author/Creator:
- Genakos, Christos.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w17172.
- NBER working paper series no. w17172
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Leveraging Monopoly Power by Degrading Interoperability
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2011.
- Summary:
- When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by "restoring" second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft's strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century.
- Notes:
- Print version record
- June 2011.
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