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Open Versus Closed Platforms

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Author Info
Tåg, Joakim () (Research Institute of Industrial Economics (IFN))

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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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Publisher 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:
Handle: RePEc:hhs:iuiwop:0747

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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Related research
Keywords: Platforms Software Two-sided Markets

Find related papers by JEL classification:
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

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This page was last updated on 2008-8-26.

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