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Platform strategy of video game software in Japan, 1984–1994: theory and evidence
Author(s) -
Maruyama Masayoshi,
Ohkita Kenichi
Publication year - 2011
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1521
Subject(s) - software , competition (biology) , video game , variety (cybernetics) , focus (optics) , value (mathematics) , marginal value , industrial organization , game theory , computer science , marketing , microeconomics , economics , business , multimedia , operating system , artificial intelligence , ecology , physics , machine learning , optics , biology
This paper analyzes a model of platform competition in markets of system products composed of hardware and complementary software, with a specific focus on exclusive contracting. When hardware products are strongly differentiated, or when consumers value the marginal benefit of additional software variety highly, we find that, in equilibrium, hardware firms will engage in exclusive contracting of software development. This finding is strongly supported by our empirical results in the Japanese home video game industry, dominated by Nintendo from 1984 to 1994. Copyright © 2010 John Wiley & Sons, Ltd.