Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel

Abstract

This paper explores Intel's strategy with respect to complements. We find that, as the literature predicts, Intel's entry decisions are shaped by the belief that it does not have the capabilities to enter all possible markets, and thus that it must encourage widespread entry despite the fact that potential entrants (rationally) fear Intel's ability to "squeeze" them ex post. We explore the ways in which Intel addresses this issue, highlighting in particular the firm's use of organizational structure and processes as commitment mechanisms. Our results have implications for our understanding of the dynamics of competition in complements and of the role of organizational form in shaping competition.