Efficiency and the Provision of Open Platforms
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.
|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.|
|Contact details of provider:|| Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden|
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