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.

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Year of publication:	2008-04-28
Authors:	Tåg, Joacim
Institutions:	Institutet för Näringslivsforskning (IFN)
Subject:	Platforms \| Two-sided Markets \| Open versus Closed

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Extent:	application/pdf
Series:	Working Paper Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Published as Tåg, Joacim, 'Competing Platforms and Third Party Application Developers' in Communication & Strategies, 2009, pages 95-114. The text is part of a series Working Paper Series Number 748 16 pages
Classification:	D40 - Market Structure and Pricing. General ; L10 - Market Structure, Firm Strategy, and Market Performance. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005041086