Compatibility, network effects, and collusion

•A market with network effects in which firms collude on prices is considered.•Full collusion is easier to sustain under compatibility.•Incentives to introduce compatibility under collusion may be higher or lower than under competition.•Intertemporal preferences can have an ambiguous effect on firms' compatibility decisions.

I consider a market with network effects in which firms collude on prices. Depending on the fixed costs for achieving compatibility, there may be a non-monotone relationship between firms' decisions to make their products compatible and their intertemporal preferences.