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Platform Competition and Innovation

Author

Listed:
  • Jeon, Doh-Shin
  • Rey, Patrick

Abstract

We study the development of apps on competing platforms. We show that competition leads to commissions exceeding those maximizing consumer surplus (and, a fortiori, social welfare) whenever raising one commission reduces rivals' app bases. We relate this nding to economies of scope in app development and, to illustrate it, consider a setting in which some developers can port their apps at no cost: as their proportion increases, app development is progressively choked-o. Fostering platform competition or interoperability may therefore fail to produce the desired results. Within-platform app store competition, together with appropriate access conditions, may constitute a more promising avenue.

Suggested Citation

  • Jeon, Doh-Shin & Rey, Patrick, 2024. "Platform Competition and Innovation," TSE Working Papers 24-1566, Toulouse School of Economics (TSE), revised Feb 2026.
    • Handle: RePEc:tse:wpaper:129700
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    References listed on IDEAS

    as
    1. Caminal, Ramon & Claici, Adina, 2007. "Are loyalty-rewarding pricing schemes anti-competitive?," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 657-674, August.
    2. Belleflamme, Paul & Peitz, Martin, 2010. "Platform competition and seller investment incentives," European Economic Review, Elsevier, vol. 54(8), pages 1059-1076, November.
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    Cited by:

    1. Axel Gautier & Leonardo Madio & Shiva Shekhar, 2025. "Network Externalities and Platform Strategy: Agency, Bundles Entry, and Integration," CESifo Working Paper Series 11711, CESifo.
    2. Gans, Joshua S., 2024. "Three things about mobile app commissions," Information Economics and Policy, Elsevier, vol. 69(C).

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    More about this item

    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • 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
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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