2006–2010

Competing Platforms and Third Party Application Developers

Reprint No. 2009:22

Author(s): Joacim TågYear: 2009 Title: Communications & Strategies Volume (No.): 2009 (74) Pages: 95–114
Online article (restrictions may apply)


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.


Reference:
Tåg, Joacim (2009), "Competing Platforms and Third Party Application Developers". Communications & Strategies 2009(74), 95–114.

Joacim Tåg

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joacim.tag@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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