서강대학교

초록/요약

This paper concerns a duopoly which produces two products which are complementary. When a firm considers the compatibility in the composite goods and the introduction of bundling as endogenous strategic choice, this paper analyzes the optimal compatibility level, price strategies and existence of bundling strategy. Analyzing the effect of change in the compatibility variable, the implication about firm’s profit and consumer welfare was derived. When the compatibility increases, there are two critical effects. First, as the products between complementary goods which are made in different firms become more compatible, there exists Demand Adjustment Effect; consumers who buy composite goods from only one firm are more likely to change their choice to other composite goods which are made from different firms. Second, the effect of increase in compatibility affects the consumers who are not in the market to participate the market. Therefore, the increasing compatibility has the Market Expansion Effect. By introducing the bundling strategy, the Price Internalization is critical effect which is referred from Choi(2008) which use a linear demand system by assuming complementarity and substitutability among product. And, in this paper, the optimal price strategy also shows the Price Internalization aspect. To solve the model, heterogeneous consumers who are discretely distributed and optimize their utility by choosing appropriate composite goods are assumed. The firms maximize their profit within discrete price choice possibility set. Because of discreteness, the simulation method is used to derive the nash equilibrium.