Citation

Discussion Paper Details

Please find the details for DP8502 in an easy to copy and paste format below:

Full Details | Bibliographic Reference

Full Details

Title: Leveraging Monopoly Power by Degrading Interoperability: Theory and evidence from computer markets

Author(s): Christos D. Genakos, Kai-Uwe K�hn and John Van Reenen

Publication Date: August 2011

Keyword(s): anti-trust, demand estimation, foreclosure and interoperability

Programme Area(s): Industrial Organization

Abstract: 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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8502

Bibliographic Reference

Genakos, C, K�hn, K and Van Reenen, J. 2011. 'Leveraging Monopoly Power by Degrading Interoperability: Theory and evidence from computer markets'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8502