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Open Versus Closed Platforms

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Author Info

  • Tåg, Joacim

    ()
    (Research Institute of Industrial Economics (IFN))

Abstract

This 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 Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 747.

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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.
Handle: RePEc:hhs:iuiwop:0747

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Keywords: Platforms; Software; Two-sided Markets;

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Cited by:
  1. Helmut Dietl & Markus Lang & Panlang Lin, 2012. "Advertising Pricing Models in Media Markets: Lump-Sum versus Per-Consumer Charges," Working Papers 0157, University of Zurich, Institute for Strategy and Business Economics (ISU).

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