Platform competition and complementor responses: insights from combining design rules with the comparative adjustment, transaction, and opportunity cost framework

Abstract

Abstract Platform owners regularly make decisions regarding whether, when, and how to upgrade their platforms as they compete with other platforms. These decisions must consider how platform complementors and rivals are likely to respond to various changes because a platform suffers in competition when the quantity or quality of its complementors is low. This paper analyzes such interactions in the US videogame industry. We show how a combined design rule-comparative adjustment, transaction, and opportunity cost framework can help to explain and predict these interactions in this industry.