Network Centrality and Device Ecosystems

Overview & Synopsis

Motivated by several examples, including Internet of Things patent licensing, we develop a tractable model of multi-product ecosystems, where one or more platforms provide inputs to a set of devices linked through demand-side externalities. Prices depend on each device's Katz-Bonacich centrality in a network dened by the externalities, and we show how the relevant network diers for an ecosystem monop- olist, a social planner, or a group of complementary platforms. We use the model to revisit Cournot's analysis of complementary monopolies in a platform setting, and to analyze a partial (one-sided) merger of complementary platforms.