It is a general phenomenon for manufacturers to provide vertically differentiated product line for more profit through improved market coverage. For such manufacturers, the compatibility between vertically differentiated products is an important decision issue. Some manufacturers provide full compatibility between high and low version products, whereas some provide only downward compatibility for the purpose of recommending high version product. In this study, the two representative compatibility strategies, full or downward, between vertically differentiated products produced by a single manufacturer are analyzed, especially under network externality and in the viewpoint of profit maximization. To do this we used a market model which captures the basic essence of vertical differentiation and network externality. Based on the proposed market model, the profit maximizing solutions are derived and numerically analyzed. The results can be summarized as follows : (1) Regardless of compatibility strategy, under network externality, vertical differentiation is always advantageous in terms of profit. (2) The full compatibility strategy is shown to be the most advantageous in terms of profit. In addition, it is necessary to make quality difference between differentiated products as wide as possible to maximize profit. (3) To gradually drive low version product out of the market and shift the weight pendulum of market to high version product, it is shown that the downward compatibility strategy is essential. Unlike intuition, however, it is also shown that in order to drive low version product out of market, it is necessary to raise the quality of the low version product rather than to lower it.

1. 서 론
2. 기본 시장모형
3. 수직적으로 차별화된 시장모형
    3.1 쌍방호환성하의 시장모형
    3.2 하방호환성하의 시장모형
4. 최적해 분석
    4.1 최적해 성립조건 분석
    4.2 가격분석
    4.3 수요(판매량)분석
    4.4 수익분석
5. 결론 및 추후연구방향
References

• Hyung-Rae Cho(경상대학교 공과대학 산업시스템공학부/공학연구원) | 조형래
• Minho Rhee(경상대학교 공과대학 산업시스템공학부/공학연구원) | 이민호 Corresponding Author