| Summary: | 碩士 === 淡江大學 === 產業經濟學系 === 89 === As we can see, many existent products have to be united together when using them in order to generate their product values, such as video and tapes, computer hardware and software, ATM machine and our ATM card, etc. Generally speaking, these united products are called “system product.” The purpose for this thesis is to investigate the effect of compatibility, network externality, and system technology disclosure and entry, to firms’ behaviors in a Cournot competition.
The differences between this thesis and the existing literature are several folds. First, we assume compatibility among products is asymmetric, and is a long-term endogenous variable for each firm. Second, a two-period model is set up. Firms choose the degree of compatibility conditional on their own technology level, and then choose quantity in a Cournot-competition market. Third, a firm, based on strategy considerations, may franchise its manufacturing technology to new firms, and hence entices more entrants. We investigate how the effect of this sort of technology disclosure works in this thesis. Forth, to see whether the competitive equilibrium achieves the social optimality, we also take into account social welfare issue. Finally, the comparative statics also explore how the network externality, network size, production cost, compatibility, the number of entrants, franchising fee, and product differentiation influence the firms’ behaviors.
The first finding coming out is that, when the product compatibility of the rival firm is decreasing, the firms will increase their own compatibility to the rival firm’s product. This enables firms to enlarge their market shares and profits. If a firm has a relatively low product cost, and a relatively low compatibility, it can increase its output level and hence profit by decreasing product differentiation.
If compatibility is a long-term endogenous variable, then the equilibrium compatibility level will be lower when the firm has a lower production cost or a lower product differentiation. On the contrary, if the firm has a relatively higher production cost or a higher network effect, then its equilibrium compatibility will get larger.
When a firm discloses its system technology, the outputs and profits of all incumbents are decreasing in the number of new entrants. However, if the firm who discloses its technology sets an enough high franchising fee, its profit may increase.
As for the social welfare, the competitive equilibrium compatibility achieves the social optimality no matter before or after technology disclosure if the marginal cost of compatibility change is constant.
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