Working Paper No. 747

Open Versus Closed Platforms

Published: April 23, 2008; revised August 28, 2008Pages: 17Keywords: Platforms; Software; Two-sided MarketsJEL-codes: D40; D42; D43; L10; L12; L13; L14

Open Versus Closed Platforms Joacim Tåg


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.


Joacim Tåg

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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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