Increasing Compatibility Among Three Firms

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Three Firms under Partial Compatibility

Note: in order to run the simulation referred to in this slide, go here, to the Java Applet version. You will be directed to download the latest version of the Java plug-in.

This slide demonstrates all the possible equilibria that result in a partially-compatible three-firm market. As on the previous slide, press any of the three initialization buttons to set up for one of the possible equilibria, then press "Go" to find it.

Note that the possibilities include a single firm monopoly, a network monopoly, and an asymmetric equilibrium in which the network output is small, but non-zero.

The exact equilibrium outputs of the firms are:

  A: 0, 0, and 18.15
  B: 13.73, 13.73, and 0
  C: 0.25, 0.25, and 17.79

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