Efficiency and the Provision of Open Platforms
17 Pages Posted: 29 Apr 2008
There are 4 versions of this paper
Competing Platforms and Third Party Application Developers
Efficiency and the Provision of Open Platforms
Competing Platforms and Third Party Application Developers
Date Written: April 2008
Abstract
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.
Keywords: Platforms, Two-sided Markets, Open versus Closed
JEL Classification: D40, L10
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries
By Dennis W. Carlton and Michael Waldman
-
Innovation, Rent Extraction, and Integration in Systems Markets
By Joseph Farrell and Michael L. Katz
-
Bundling and Competition on the Internet
By Yannis Bakos and Erik Brynjolfsson
-
Vertical Foreclosure with the Choice of Input Specifications
By Jay Pil Choi and Sang-seung Yi
-
Two-Sided Network Effects: A Theory of Information Product Design
-
Tying and Innovation: A Dynamic Analysis of Tying Arrangements
By Jay Pil Choi
-
An Economist's Guide to U.S. V Microsoft
By Richard Gilbert and Michael L. Katz