Open Access
Authors: Massimo Motta and Sandro Shelegia
Journal of Economics and Management Strategy, September, 2024A monopoly platform may prevent a startup which sells a complementary product from developing a competing platform by copying it. Imitation reduces the potential rival's profits from the new platform and thus its incentives to invest. The anticipation of the incumbent's aggressive behavior may also create an “ex ante” effect, by inducing the rival not to challenge the incumbent with a new platform (i.e., not to enter the “kill zone”) and to develop another (noncompeting) product instead. This finding is robust to several extensions.
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