Efficiency and the Provision of Open Platforms

17 Pages Posted: 29 Apr 2008  

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 3 versions of this paper

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

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

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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