Essays on industrial organization and technology management

The goal of this dissertation is to analyze three important issues related to technology management: (1) compatibility decision between old and new technology standards; (2) architecture choice between open and closed systems; and (3) relationship between marketing of an old product and an R&D investment for new products. Chapter one studies how hardware company's decision on compatibility affects software supply and hardware demand. First, looking at a competitive hardware market, we show that backward compatibility always increases the valuation of hardware by the marginal consumer, but it can reduce the valuation of higher consumer types. Next, we look at a monopoly case. The effect of backward compatibility on the profit of the monopolist depends on how consumers substitute between old and new software programs and how sensitive the number of programs is to consumers' expenditures. The final part considers the case where the hardware firm has an option to employ an ‘open licensing contract’ on the software market. In this case, the firm uses the combination of the hardware price and a licensing fee to price discriminate between different consumer types. We study how compatibility decisions affect the price-discrimination scheme.; Chapter two studies the open system in the framework of R&D competition. The goal of this paper is to understand the relationship among the incumbent's architecture choice, consumers' technology choices, and the entrant's R&D decision. This paper concludes that the incumbent wants to preempt more efficient entrants' technologies by choosing the open system and that the open system might result in a premature market standard.; Chapter three investigates the case where a durable goods monopolist has an option of doing R&D. When a durable good monopolist can improve a current product, the firm solves both the optimal R&D investment for a new version of the product and the optimal pricing of successive generations of the durable good. This chapter investigates these optimization problems and the interaction between R&D decision and intertemporal pricing decision. We show that these interactions between them become separate either when products have zero marginal production cost or when it is optimal for the monopolist to continue selling the old product even after introducing the new product.