Open Versus Closed Platforms

18 Pages Posted: 23 Apr 2008

See all articles by Joacim Tåg

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 4 versions of this paper

Date Written: April 2008

Abstract

This paper studies an industry in which firms can choose to provide open or closed platforms. Open platforms, as opposed to closed, are extendable so 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.

Keywords: Platforms, Software, Two-sided Markets

JEL Classification: D40, D42, D43, L10, L12, L13, L14

Suggested Citation

Tåg, Joacim, Open Versus Closed Platforms (April 2008). IFN Working Paper No. 747. Available at SSRN: https://ssrn.com/abstract=1124462 or http://dx.doi.org/10.2139/ssrn.1124462

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

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

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