Competing Platforms and Third Party Application Developers

Joacim Tåg

Communications & Strategies, 2009, vol. 1, issue 74, 95-116

Abstract: Technology firms often decide between being open or closed to third party application development. Building on a two-sided market model with competing platforms, I show that firms might prefer to restrict third party application development despite the fact that allowing it is free and increases the value of the product to consumers. The reason is that restricting third party application development removes network effects and thereby relaxes competition between platforms. From a social welfare perspective, firms sometimes restrict third party application development even though total welfare would be higher if development was possible.iscussion about five propositions that should be on the agenda of research and implementation for Living Lab founders in the coming years.

Keywords: platforms; software; two-sided markets. (search for similar items in EconPapers)
JEL-codes: O31 O32 O33 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://repec.idate.org/RePEc/idt/journl/CS7405/CS74_TAG.pdf

Related works:
Working Paper: Open Versus Closed Platforms (2008)
Working Paper: Efficiency and the Provision of Open Platforms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:idt:journl:cs7405

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