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This paper is mainly related to two recent industrial organisation literature themes: (1) the profitability and efficiency properties of the duality of prices and quantities in differentiated duopoly, early analysed by Singh and Vives, and (2) the economics of networks and two-sided markets (e.g., ).Īs Singh and Vives show (1984) 1 (and later ), the comparison in terms of profitability and welfare between the outcomes of quantity and price competition leads to clear-cut results: firms’ profits in a duopoly context are higher when firms compete in quantities ( à la Cournot) than when competing in prices ( à la Bertrand) if products are (imperfect) substitutes (and, vice versa, when goods are complements) social welfare is always larger under Bertrand independent of whether products are substitutes or complements. In contrast to the traditional result, equilibrium profits are higher under Cournot or Bertrand competition depending upon the degree of complementarity between platform and application producers as well as the degree of substitutability between applications the social welfare may be higher under Cournot when the application products are highly substitutable. In a software industry based on a platform firm and two firms producing differentiated applications complementary to the platform, we investigate the effects on profits and welfare of the choice of different contracts (price versus quantity) by the application firms.