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Efficiency and the Provision of Open Platforms

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Author Info

  • Tåg, Joacim

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

Abstract

Private 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 Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 748.

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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.
Handle: RePEc:hhs:iuiwop:0748

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Keywords: Platforms; Two-sided Markets; Open versus Closed;

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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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