The Competitive Strategy for Platform in the Infomation Industry - Application of Game Theory

• Main Authors: Wang, Yi-Ping, 王怡萍
• Other Authors: Jong-Tsong Chiang, Horng-Ren Chiou
• Format: Others
• Language: zh-TW
• Published: 1997
• Online Access: http://ndltd.ncl.edu.tw/handle/20384151386002520798

碩士 === 國立臺灣大學 === 商學研究所 === 85 === In the information industry, the competition of platforms, such as OS and CPU, has far-reaching impacts on the formation of standards and thus the market positions of the players. Because of the strong network effects, the competition in this market sometimes leads to a scenario of *the winner takes all* when the market share of some platform exceeds a so-called critical mass. To understand the underlying mechanisms, this thesis tries to apply the game theory?}_Evolutionary Stable Strategy (ESS) to study the competition of two platforms. ESS is appropriate for modeling in that it can be used to analyze the dynamics of a large group of players with bounded rationality. Through rather easy mathematical deduction, ESS can show the market evolution of products of different characteristics. In this thesis, the equilibrium models of ESS are first used to categorize the markets of information products, and the asymmetric models, to explain the network externalities of platforms. Then based on the characteristics of platforms (including the accumulation of users* value and users* adoption costs) and the time lag of introducing incompatible platforms (meaning that customers are *locked-in* to the platform introduced earlier), the competition of platforms are classified into eight groups each with different types of market evolution. The main findings of this thesis are as follows. I. The competition of two platforms may result in three kinds of markets:A. Monopoly of one platform that is superior to the other * from the customers* standpoint * or that is introduced to the market earlier.B. Oligopoly of two platforms each with certain market shares.C. The winner takes all when its market share exceeds some critical mass.II. The competitive strategy for platforms consists of two periods:A. When the platforms are introduced, the competitors should take into consideration two crucial dimensions: the characteristics of the platforms and the time lag of introducing incompatible platforms. Also the competitors should decide whether and to what degree the standards are open or proprietary. Besides, late entrants can adopt the strategy of compatibility.B. When the markets are growing, the competitors should focus on accelerating the market adoption of products, increasing the market share, and lowering the critical mass. In conclusion, the competitors should give heed to the evolution of the games and the game rules as well. If possible, they should also actively change the game rules to their advantage.