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2816. First- and third-party complementary apps: R&D investment, launching, and M&A strategies
Invited abstract in session MC-8: Applications of knowledge and innovation in finance, stream AI & Innovation in Sustainable Finance.
Monday, 12:30-14:00Room: 1020 (building: 202)
Authors (first author is the speaker)
| 1. | Priel Levy
|
| Bar Ilan University | |
| 2. | Tatyana Chernonog
|
| Management, Bar Ilan University |
Abstract
With the massive growth of app usage and smartphone penetration, an increasing number of third-party developers are offering their complementary apps aiming to target the massive audience of the leading core apps, and thereby enhance user experience. At the same time, leading developers launch their own complementary apps, which compete with the third-party apps in terms of quality. The effect of the third-party developer on the first-party developer is twofold: On the one hand, the former creates added value for the core app, which translates into additional profit for the first-party developer, generated by the core app. On the other hand, the competition between first- and third-party substitutable apps threatens the first-party developer's profit gained from its own substitutable app. Similarly, the third-party developer rides on the big market of the core app, while its own market share may be eroded due to the competition between the two substitutable apps. In this study, we develop a game-theoretical model of a market consisting of three apps: a core app, and two partially substitutable apps, both of which complement the core app. We investigate the app developers' R&D strategies, and derive conditions for launching their complementary apps. In addition, the core-app developer's M&A strategy is analyzed.
Keywords
- Supply Chain Management
- E-Commerce
Status: accepted
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