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

No 748:
Efficiency and the Provision of Open Platforms

Joacim Tåg ()

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; (follow links to similar papers)

JEL-Codes: D40; L10; (follow links to similar papers)

16 pages, April 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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