Equilibrium Innovation Ecosystems: The Dark Side of Collaborating with Complementors

Andrea Mantovani, Francisco Ruiz-Aliseda
2012 Social Science Research Network  
The recent years have exhibited a burst in the amount of collaborative activities among ...rms selling complementary products. This paper aims at providing a rationale for such a large extent of collaboration ties among complementors. To this end, we analyze a game in which the two producers of a certain component have the possibility to form pairwise collaboration ties with each of the two producers of a complementary component. Once ties are formed, each of the four ...rms decides how much to
more » ... invest in improving the quality of the match with each possible complementor, under the assumption that collaborating with a complementor makes it cheaper to invest in enhancing match quality with such complementor. Once investment choices have taken place, all ...rms choose prices for their respective components. Our main ...nding in this setting is that ...rms end up forming as many collaboration ties as it is possible, although they would all prefer a scenario where collaboration were forbidden, unlike a social planner.
doi:10.2139/ssrn.2050969 fatcat:57e7zzen7naqzi44x374xakxjy