We analyse firms' incentives to provide two-way compatibility between two network goodswith different intrinsic qualities. We study how the relative importance of verticaldifferentiation with respect to the network effect influences the price competition as well as thecompatibility choice. The...

In this paper we analyze how the technology used by downstream firms can influence inputand output market prices. We show via an example that both these prices increase under adecreasing returns technology while the contrary holds when the technology is constant....