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On platforms, incomplete contracts, and open source software

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  • Niedermayer, Andras

Abstract

We analyze investment incentives for a firm A owning a software platform and an application and a firm B deciding whether to develop a new application for the platform. While B's entry helps the success of the platform, B fears ex post expropriation by A and is hence reluctant to enter and invest. We show that different platform governance structures prevalent in the Information and Communication Technology industry (integrated, proprietary, standardized, open source platform) serve to balance investment incentives for the platform and for the applications.

Suggested Citation

  • Niedermayer, Andras, 2013. "On platforms, incomplete contracts, and open source software," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 714-722.
  • Handle: RePEc:eee:indorg:v:31:y:2013:i:6:p:714-722
    DOI: 10.1016/j.ijindorg.2013.07.003
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:eecrev:v:94:y:2017:i:c:p:221-239 is not listed on IDEAS
    2. Maija Halonen-Akatwijuka & Evagelos Pafilis, 2018. "Common Ownership of Public Goods," Bristol Economics Discussion Papers 18/700, Department of Economics, University of Bristol, UK.

    More about this item

    Keywords

    Platforms; Open source; Standardization; Incomplete contracts; Property rights; Information Technology;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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