The Compatibility of Products and the Cooperation and Competition Between Firms

Aim To study the relationship of cooperation and competition between firms on tactics of compatibility of products. Methods Making use of the network externality and compatibility of consumers, the methods of game theory were applied. Results and Conclusion The smaller firm can raise its production and profit by adopting tactics of compatibility of product on the condition of positive network externality. When the opponents of competition have the same scale of product and the same power of competition, they can get more profit by outputting compatible products. Firms can increase their profit by means of the cooperation on compatibility between firms, but the competition between firms exists still.