Journal
INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION
Volume 31, Issue 6, Pages 714-722Publisher
ELSEVIER
DOI: 10.1016/j.ijindorg.2013.07.003
Keywords
Platforms; Open source; Standardization; Incomplete contracts; Property rights; Information Technology
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We analyze investment incentives for a firm A owning a software platform and an application and a firm B deciding whether to develop a new application for the platform. While B's entry helps the success of the platform, B fears ex post expropriation by A and is hence reluctant to enter and invest. We show that different platform governance structures prevalent in the Information and Communication Technology industry (integrated, proprietary, standardized, open source platform) serve to balance investment incentives for the platform and for the applications. (C) 2013 Elsevier BM. All rights reserved.
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