Open Versus Closed Platforms
AbstractThis paper studies an industry in which firms can choose to provide open or closed platforms. Open platforms, as opposed to closed, are extendable so third-party producers can develop extensions for them. Building on a two-sided market model, I show that firms might prefer to commit to keeping their platforms closed despite the fact that opening the platform is costless and open platforms are more valuable to consumers. The reason is that opening the platform may lead to intensified competition for consumers.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 747.
Length: 17 pages
Date of creation: 12 Apr 2008
Date of revision: 28 Aug 2008
Publication status: Published in Communication & Strategies, 2009, pages 95-114.
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Platforms; Software; Two-sided Markets;
Other versions of this item:
- Joacim TÅG, 2009. "Competing Platforms and Third Party Application Developers," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(74), pages 95-116, 2nd quart.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-05 (All new papers)
- NEP-COM-2008-07-05 (Industrial Competition)
- NEP-IPR-2008-07-05 (Intellectual Property Rights)
- NEP-MIC-2008-07-05 (Microeconomics)
- NEP-MKT-2008-07-05 (Marketing)
- NEP-NET-2008-07-05 (Network Economics)
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