Compatibility in two-sided markets

I study two-sided markets where the platform is composed of components supplied by di¤erent producers. I examine a producers incentive to provide compatibility of its product with other suppliers. Two models are considered. In the \u85rst model, I \u85nd that tying of a complementary product may be pro\u85table. In the second model, I \u85nd that a durable-good monopolists introduction of incompatibility between successive generations of products will improve social welfare if multi-homing is allowed. These results are at variance with those obtained in conventional markets. (JEL D00, L00