An economic analysis of platform sharing:

We explore the managerial implications and economic consequences of platform sharing under models of horizontal and vertical product differentiation. By using a common platform across different products, firms can save on fixed costs for platform development. At the same time, platform sharing impos...

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Bibliographic Details
Main Authors: Ghosh, Arghya (Author), Morita, Hodaka (Author)
Format: Book
Language:English
Published: Cambridge, Mass. National Bureau of Economic Research 2007
Series:Working paper series / National Bureau of Economic Research 13058
Online Access:Volltext
Summary:We explore the managerial implications and economic consequences of platform sharing under models of horizontal and vertical product differentiation. By using a common platform across different products, firms can save on fixed costs for platform development. At the same time, platform sharing imposes restrictions on firms' ability to differentiate their products, and this reduces their profitability. It might appear that platform sharing across firms makes consumers worse off because firms cooperate in their product development processes to maximize their joint profit. We find, however, that platform sharing across firms benefits consumers in our framework because it intensifies competition in our horizontal differentiation model, and because it increases the quality of the lower-end product in our vertical differentiation model. We also show new channels through which a merger makes consumers worse off in the presence of platform sharing.
Physical Description:29 S. 22 cm

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