Monday, June 16, 2008
Posted by D. Daniel Sokol
A paper on an important topic is Efficiency and the Provision of Open Platforms by Joacim Tag, Swedish School of Economics and Business Administration - Department of Economics, Helsinki Center of Economic Research (HECER).
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.