Open versus closed platforms

This paper studies an industry where firms can choose to provide open or closed platforms. Open, as opposed to closed, platforms are extendable so that third-party producers can develop extensions for them. Building on a two-sided market model, I show that firms might prefer to commit to keeping their platforms closed despite the fact that opening the platform is costless and open platforms are more valuable to consumers. The reason is that opening the platform may lead to intensified competition for consumers. -- Platforms ; Software ; Two-sided markets