Efficiency and the Provision of Open Platforms
AbstractPrivate firms may not have efficient incentives to allow third-party producers to access their platform or develop extensions for their products. Based on a two-sided market model, I discuss two reasons for why. First, a private firm may not be able to internalize all benefits from cross-group externalities arising with third-party extensions. Second, firms may have strategic incentives to shut out third-parties because it relaxes competition.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 748.
Length: 16 pages
Date of creation: 28 Apr 2008
Date of revision:
Publication status: Published as Tåg, Joacim, 'Competing Platforms and Third Party Application Developers' in Communication & Strategies, 2009, pages 95-114.
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Platforms; Two-sided Markets; Open versus Closed;
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
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
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-ICT-2008-07-05 (Information & Communication Technologies)
- NEP-MIC-2008-07-05 (Microeconomics)
- NEP-NET-2008-07-05 (Network Economics)
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