Ecosystems and Complementary Platforms

Abstract

Motivated by several examples, including Internet of Things patent licensing, we develop a tractable model of multi-product ecosystems, where one or more platforms provide inputs to a set of devices linked through demand-side externalities. Prices depend on each device's Katz-Bonacich centrality in a network defined by the externalities, and we show how the relevant network differs for an ecosystem monopolist, a social planner, or a group of complementary platforms. We use the model to revisit Cournot's analysis of complementary monopolies in a platform setting, and to analyze a partial (one-sided) merger of complementary platforms.

Keywords

Reference

Doh-Shin Jeon, Yassine Lefouili, Yaxin Li, and Timothy Simcoe, “Ecosystems and Complementary Platforms”, TSE Working Paper, n. 23-1468, September 2023, revised April 2024.