Competition and Integration Among Complements,

and Network Market Structure


Nicholas Economides


Steven C. Salop


This article analyzes the competition and integration among complementary products that can be combined to create composite goods or systems. The model generalizes the Cournot duopoly complements model to the case in which there are multiple brands of compatible components. It analyzes equilibrium prices for a variety of organizational and market structures that differ in their degree of competition and integration. The model applies to a variety of product networks including ATMs, real estate MLS, airlines CRS, as well as to non-network markets of compatible components such as computer CPUs and peripherals, hardware and software, and long distance and local telephone services.

Published in Journal of Industrial Economics, vol. XL, No. 1, March 1992, pp. 105-123.

* Stern School of Business, New York, NY 10012, tel. (212) 998-0864, fax (212) 995-4218, e-mail:, www:

** Georgetown University Law Center.

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