Friends or Foes? Strategic Technology Opening and Adopting under Competition between Technological Firms

Abstract

This study investigates the motivation behind an incumbent firm's strategy to open up its technology and an entrant's decision on whether to adopt this technology. We model the interactions between firms’ strategies toward coopetition and the entrant's technology development capacity, as well as the technology transformation rate, which occurs in the technology adopting process. We find that the two technological parameters exert significant influence on the coopetition decisions of firms. Moreover, consumer surplus and social welfare are compared under different configurations. We further verify the robustness of our main results in two extension cases.