Scandinavian Working Papers in Economics
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Research Institute of Industrial Economics (IFN) Working Paper Series

No 747:
Open Versus Closed Platforms

Joacim Tåg ()

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; (follow links to similar papers)

JEL-Codes: D40; D42; D43; L10; L12; L13; L14; (follow links to similar papers)

17 pages, April 12, 2008, Revised August 28, 2008

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This paper is published as:
Tåg, Joacim, (2009), 'Competing Platforms and Third Party Application Developers', Communication & Strategies, Vol. 74, pages 95-114

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