Publication Type

Conference Paper

Publication Date

5-2010

Abstract

We examine the competition between a proprietary platform and an open platform,where each platform holds a two-sided market consisted of app developers and users.The open platform cultivates an innovative environment by inviting public efforts todevelop the platform itself and permitting distribution of apps outside of its own appmarket; the proprietary platform restricts apps sales solely within its app market. Weuse a game theoretic model to capture this competitive phenomenon and analyze theimpact of growth of the open source community on the platform competition. We foundthat growth of the open community mitigates the platform rivalry, and balances the developernetwork sizes on the two platforms. The platforms’ relative dominance is foundto be a key determining factor in the effect of open community growth in equilibrium.Furthermore, total surplus on the open platform and total welfare of the two platformsboth increase as the open community grows.

Keywords

Game theory, open innovation, platform economy, network effect

Discipline

Digital Communications and Networking | Technology and Innovation | Theory and Algorithms

Research Areas

Information Systems and Management

Publication

The 8th Annual International Industrial Organization Conference, Vancouver, Canada, 2010 May 14-16

Publisher

Singapore Academy of Law

City or Country

Vancouver

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.