• Corpus ID: 33240943

. 209 Open Versus Closed Platforms *

  title={. 209 Open Versus Closed Platforms *},
  author={Joacim T{\aa}g},
This paper studies an industry in which rms 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 rms 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 intensi ed competition for… 

Figures from this paper


Proprietary vs. Open Two-Sided Platforms and Social Efficiency
This paper identifies a fundamental economic welfare trade off between two-sided open platforms and two-sided proprietary (closed) platforms connecting consumers and producers. Proprietary platforms
Pricing and commitment by two‐sided platforms
I study pricing and commitment by platforms in two-sided markets with the following characteristics: (i) platforms are essential bottleneck inputs for buyers and sellers transacting with each other;
Platform competition in two sided markets
Many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must “get both sides of
Open Versus Closed Firms and the Dynamics of Industry Evolution
We develop a model of industry evolution in which firms choose proprietary standards (closed firm) or adopt a common standard (open firm). A closed entrant can capture multiple profits whereas an
Vertical Integration and Exclusivity in Two-Sided Markets
The impact of vertically integrated and exclusive software on industry structure and welfare in the sixth-generation of the U.S. videogame industry (2000-2005) is measured to simulate market outcomes had platforms been unable to own or contract exclusively with software.
Merchant or Two-Sided Platform?
This paper provides a first pass at comparing two polar strategies for market intermediation: "merchant" mode – buying from sellers and reselling to buyers - and "two-sided platform" mode – enabling
Open and closed systems of two-sided networks
Two-sided markets: a progress report
The paper provides a road map to the burgeoning literature on two-sided markets and presents new results. It identifies two-sided markets with markets in which the structure, and not only the level
Competition in Two-Sided Markets ¤
There are many examples of markets involving two groups of participants who need to interact via intermediaries. Moreover, these intermediaries usually have to compete for business from both groups.
Profitability under an Open versus a Closed System
The results show that an open system is likely to be more profitable than a closed one when demand for the system is more elastic, when secondary-component variety is more valued, and when the share of the main component in the total system budget of the consumer is high.