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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

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: https://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
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