Innovation, Openness and Platform Control

in Digital Technologies, Research Day
May 14th, 2012

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Marshall Van Alstyne

Information Systems

Authors: Marshall Van Alstyne and Geoffrey Parker

We develop an analytic model to examine the optimal level of openness and the optimal duration of property rights in a platform ecosystem such as that of Apple, Google, Facebook, or Microsoft. The model accounts for two periods of sequential innovation and the subsidies that the platform owner provides to developers in order to increase innovation for that platform. Intuitions are also shaped by dozens of hours with executives at platform firms. This is a working paper.