individingupmarkets.Recognizingdemandcomplementarityandtheresultingnegativeexternalityinpro tfunctionshasimportantimplicationstounderstandinganddesigningbusinessstrategies.

Forinstance,inthecontextofmulti-productmonopoly,thenegativedemandex-ternalityoftenimpliescross-productsubsidization.Examplesofcross-productexter-nalitiesincludeAbobeAcrobatreaderandwriter,newspaper(orTV)subscriptionandadvertisingservices,telephone/cellularphoneservices(callersandreceivers),shoppingmallswithdi erentretailers(aswellasretailersandcustomers),creditcardissuersandacquirers,andsoon.Thesemarketsaresometimescalledtwo-sidedormulti-sidedmarketssincetwoormoregroupsofparticipantsneedtointeractvia(monopolisticorcompetitive)intermediaries.WewilldiscussthisissueinSection

3.6.

Inacompetitivesituation,integrated rmsmaybeabletousetechnologicalinstrumentstocontrolthedirectionofcross-productexternalitiesandputnon-integratedrivalsinadisadvantageousposition.Anearlyexampleconcernsadisplaybiasassociatedwithcomputerreservationsystems(CRS).EarlyinthedevelopmentofCRS,theairlinesthatownedthemhadincentivestolisttheirown ightsbeforetheirrivals’ ights.Duetoastandardagencyproblem,travelagents,knowingtheexistenceofthebias,maynothaveincentivestospendtimetosearchforthebestschedulefortheircustomersandwouldeasilychoosethescheduleonthetopoftheircomputerscreen.FisherandNeels(1997)estimatethatduetothisdisplaybias,$58millionwasdivertedbytworeservationsystems(i.e.,SabresystemownedbyAmericanAirlinesandApollosystembyUnitedAirlines)in1984.Eventually,theCivilAeronauticBoardintheU.S.forbadesuchpractice.Inthisexample,therearethreecomplementaryproducts:travelreservationservices,reservationsystems,andairtravels.Travelagentso ertheircustomeraccessto ightinformationprovidedbycomputerreservationsystemsandorganized,indirectly,byairlines.

Internetmarketsshareasimilarfeaturewiththecomputerreservationsystem:informationshowingonthetopofthecomputerscreenoronthe rstscreenofanInternetportaltendstobemorevaluable.LuandTan(2003)provideamodeltoanalyzehowthe rstscreenadvantageandthestickinessofwebsitescanhelpunder-standmanyrecentmergersbetweenInternetserviceprovidersandcontentproviders.Aserviceproviderhastheadvantageofcontrollingthe rstscreenseenbyitssub-scribersandisabletocreatesomeformofstickinesstoprolongeachsubscriber’sstayatitswebsite.Thestickierisawebsite,themoreadvertisementsitwillgenerate.Thecontentproviderthenhasincentivestointegratewithitsserviceproviders.Acombinationofthe rstscreenadvantageandthestickinessofwebsiteso ersincen-tivesfor rmsincomplementarymarketstoexploitthedemandcomplementarity