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Institute of Business and Economic Research
Competition Policy Center
University of California, Berkeley
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Innovation, Rent Extraction, and Integration in Systems Markets
Joseph Farrell, Economics Department, University of California, Berkeley
Michael Katz, Haas School of Business, Department of Economics, University of California, Berkeley

Download the Paper (142 K, PDF file) - January 1, 2000 Tell a colleague about it.
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ABSTRACT:
We consider innovation incentives in markets where final goods comprise two strictly complementary components, one of which is monopolized. We focus on the case in which the complementary component is competitively supplied, and in which innovation is important. We explore ways in which the monopoly may have incentives to confiscate efficiency rents in the competitive sector, thus weakening or destroying incentives for independent innovation. We discuss how these problems are affected if the monopolist integrates into the competitive sector.

SUGGESTED CITATION:
Joseph Farrell and Michael Katz, "Innovation, Rent Extraction, and Integration in Systems Markets" (January 1, 2000). Competition Policy Center. Paper CPC99-006.
http://repositories.cdlib.org/iber/cpc/CPC99-006

 
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