Efficiency and the Provision of Open Platforms

Tåg, Joacim

doi:10.2139/ssrn.1126511

Abstract

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Efficiency and the Provision of Open Platforms

Joacim Tåg

Research Institute of Industrial Economics (IFN)

April 2008

IFN Working Paper No. 748

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.

Number of Pages in PDF File: 17

Keywords: Platforms, Two-sided Markets, Open versus Closed

JEL Classification: D40, L10

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Date posted: April 29, 2008

Suggested Citation

Tåg, Joacim, Efficiency and the Provision of Open Platforms (April 2008). IFN Working Paper No. 748. Available at SSRN: http://ssrn.com/abstract=1126511 or http://dx.doi.org/10.2139/ssrn.1126511

Contact Information

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden