We address the possibility of foreclosure in markets where the final good consists of a system composed of a hardware good and complementary software and the value of the system depends on the availability of software. Foreclosure occurs when a hardware firm merges with a software firm and The integrated firm makes its software incompatible with a rival technology Or system. We find that foreclosure can be an equilibrium outcome where Both the merger and compatibility decisions are part of a multistage game Which permits the foreclosed hardware firm to play a number of counter- Strategies. Further, foreclosoure can be an effective strategy to monopolize the Hardware market.
展开▼
