Content provision and compatibility in a platform market

- Compatibility leads to higher prices.
- Compatibility increases developers' incentives to create content for a larger user base.
- Compatibility may result in higher or lower license fees, i.e., content may go down or up.
- Compatibility may be particularly harmful if the scope of content is reduced.
- Compatibility may be beneficial if content is sufficiently increased.

This paper studies the ambiguous welfare effects of compatibility in a platform market with endogenous content provision. Compatibility can be particularly harmful if it leads to reduced content but can be beneficial if content is sufficiently increased.