Multihoming and Compatibility

Abstract

This paper analyzes the consequences of multihoming on private and social incentives for compatibility. Multihoming occurs in our model when consumers buy from both of two competing firms so as to capture network benefits. We address whether the ability of consumers to multihome means policymakers do not need to worry about compatibility between "networks".

Keywords: networks, multihoming, compatibility, two-sided markets

JEL Classification: L11, L12, L13