Lecture: Frenemies in Platform Markets: Heterogeneous Profit Foci as Drivers of Compatibility Decisions

Speaker: Jianqing Chen

Time: 2:00-3:30 p.m., 26th September,2018

Venue: Room 208, Tongji Building A

Abstract:

We study compatibility decisions of two competing platform owners that generate profits through both hardware sales and royalties from content sales. We consider a game-theoretic model in which two platforms offer different standalone utilities to users. We find that incentives to establish one-way compatibility—the platform owner with smaller standalone value grants access to its proprietary content application to users of the competing platform—can arise from the difference in their profit foci. As the difference in the standalone utilities increases, royalties from content sales become less important to the platform owner with greater standalone value, but more important to the other platform owner. One-way compatibility can thus increase asymmetry between the platform owners’ profit foci and, given a sufficiently large difference in the standalone utilities, yields greater profits for both platform owners. We also investigate how factors such as exclusive content and platform-only adopters affect compatibility incentives.

Bio:

Dr. Jianqing Chen is an associate professor in information systems at the Jindal School of Management at the University of Texas at Dallas. He received his Ph.D. from McCombs School of Business at the University of Texas at Austin and his Bachelor and Master from Tsinghua University. His general research interests are in electronic commerce, economics of information systems, and supply chain management. His current research focuses are: (1) platform business models; (2) social media and user-generated content; (3) search engine advertising; and (4) supply chain risk management. His papers have been published in top academic journals across different fields, including Information Systems Research, MIS Quarterly, Management Science, Journal of Marketing Research, Journal of Marketing, Production and Operations Management, Journal of Management Information Systems, Economics Letters, Decision Analysis, and Decision Support Systems. He received ISS Sandra A. Slaughter Early Career Award of INFORMs in 2016 and won Dean’s Award for “Outstanding New Scholar” in 2009. In Tsinghua, he received the highest student honor—Tsinghua Top-Grade Scholarship. He received the Best Paper awards for the Fifteenth Conference on Information Systems and Technology (CIST) in 2010 and for the China Summer Workshop on Information Management (CSWIM) in 2007, 2012, and 2015. He is currently an Associate Editor of Information Systems Research and of Journal of Electronic Commerce Research. He co-chaired CSWIM 2016, and co-chair E-Business Cluster of INFORMs in 2013 and co-chaired Information Systems Cluster of INFORMs in 2014.